The how when and why of merger control as applied to deals in the digital space is hotly debated. There was insight from the French Competition Authority in a recent comment. Isabelle de Silva, the chief of the Autorité de la Concurrence, the French Competition Authority, has reportedly suggested in a television interview that the usual merger control time limits should not apply to particular digital mergers.
MLex reports that she also indicated that she thought regulatory review should be possible on all digital platform mergers, not just those above a particular turnover threshold, an idea that has been floated in competition circles.
Her comments raise interesting questions about the role of merger review. In the EU and the UK, competition authorities are required to conduct a forward-looking analysis of the likely impact a transaction will have on competition. Where this review raises concerns, they can seek binding undertakings from the parties involved, or they can prohibit the transaction.
Whilst such reviews usually include an in-depth evidence-gathering procedure and considerable analysis, there is an element of crystal-ball gazing to the process. No regulator can predict, with 100% certainty, the future. This is a tricky exercise and occasionally regulators prove unable to foresee post-merger effects which are adverse to competition.
However, to allow regulatory intervention either (i) for a long time after the deal has closed, or (ii) indefinitely after the deal has closed, arguably shifts the balance of power too far into the regulators’ hands. Such an open-ended risk of regulatory review would introduce a considerable amount of uncertainty into the market. Moreover, it does not seem likely it would work to encourage compliance with competition legislation either; this is why there is an ex-post regime to tackle abuse of dominance and anti-competitive agreements.
Ms de Silva’s comments come as the French legislature considers legislation to provide for regulatory review of all mergers conducted by Google, Apple, and Facebook which affect France, regardless of the size of the deal.
Please contact Tim Cowen if you have any questions regarding EU or UK competition law.