An amalgamation or joining of two or more firms into an existing firm or to form a new firm. A merger is a method by which firms can increase their size and expand into existing or new economic activities and markets. A variety of motives may exist for mergers: to increase economic efficiency, to acquire market power, to diversify, to expand into different geographic markets, to pursue financial and R&D synergies, etc. Mergers are classified into three types:
Horizontal Merger: Merger between firms that produce and sell the same products, i.e., between competing firms. Horizontal mergers, if significant in size, can reduce competition in a market and are often reviewed by competition authorities. Horizontal mergers can be viewed as horizontal integration of firms in a market or across markets.
Vertical Merger: Merger between firms operating at different stages of production, e.g., from raw materials to finished products to distribution. An example would be a steel manufacturer merging with an iron ore producer.
Vertical mergers usually increase economic efficiency, although they may sometimes have an anticompetitive effect.
Conglomerate Merger: Merger between firms in unrelated business, e.g., between an automobile manufacturer and a food processing firm.
Source: OECD
On 8 June 2016, the Chinese Ministry of Commerce (“MOFCOM“) released its decision to lift the conditions it had imposed on Walmart’s acquisition of 33.6% of the shares in Newheight Holdings. This acquisition in 2012 gave Walmart corresponding rights over Yihaodian, one of China’s best-known e-commerce supermarkets, through a reported “variable interest entity” (“VIE“) structure….
The European Commission recently published its decision clearing the joint acquisition by Electricité de France S.A. (EDF) and China General Nuclear Power Corporation (CGN) over a group of companies active in the nuclear energy sector. The decision provides a warning that transactions involving a Chinese State-owned enterprise (SOE) may trigger a mandatory notification to the…
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79th Lunch Talk of the Global Competition Law Center Monday, March 14, 2016 from 12:00 PM to 2:00 PM Assessing unilateral effects in horizontal mergers: closeness of competition and the role of bidding data with Daniel Coublucq, DG COMP Sascha Schubert, Freshfields David Spector, MAPP Economics Moderator: Damien Gerard, GCLC Programme: 12:00 – 12:30: Sandwich…
DG COMP has published a study by the University of East Anglia analysing the European Commission’s approach to geographic market definition in recent cases. It has reviewed ten cases from 2008-2014 where geographic market definition was a key issue. The study looked at the Commission’s geographic market analysis in terms of the methodology used and…
Timur Bondaryev and Lana Sinichkina, Arzinger On January 26, 2016 Ukrainian Parliament adopted the law amending Ukrainian merger control rules. The law increased notification thresholds which have been effective for over 14 years after they were introduced in 2002. The current financial thresholds test is substituted by the two new alternative ones (either A or…
