Brussels, 28/11/2007 (Agence Europe) - On Wednesday 28 November, Competition Commissioner Neelie Kroes announced the adoption of guidelines on the method used by the Commission in its assessment of so-called “non-horizontal” measures. These guidelines aim to make the evaluation process used by the Commission more transparent, and to allow companies looking into this type of operation to see for themselves whether their plans are in line with Emission standards.
“Non-horizontal” concentrations are, as the name suggests, vertical mergers between a supplier and its client, but also cover conglomerate mergers between two businesses with connected activities (the commissioner gave the example of a producer of razor blades with designs on a company that produces shaving foam). These mergers bring about competition problems which are different from those in horizontal mergers, particularly because they do not immediately reduce the number of competitors present on the market. However, they can harm free competition by other means, as the Commission explains its guidelines.
The Commission explains that vertical concentrations must not put the new entity in a position to be able to deny its competitors access to a supplier, or to impose price increases on them for their inputs. For example, the purchase of Pfizer's Consumer Health Division by Johnson & Johnson was made subject to certain conditions by the Commission, to prevent Johnson & Johnson from being able to control the key inputs required for the production of nicotine patches by its competitor on this market, GSK. As regards “conglomerate” mergers, the Commission is particularly concerned by the potential capacity of a merged entity to wipe its competitors from the market by regrouping its products in such a way as to make open competition very difficult. This tactic, which is known as 'forclosure', would, for the example given above, consist of selling razor blades only with shaving foam ('tying' or 'coupling'), making market access difficult for other producers of shaving foam. Ms Kroes has expressed the hope that once they are informed of what constitutes an obstacle to competition, companies will refrain from tabling merger notifications presenting these characteristics. The entire text of the guidelines (currently in English only) is available at: http: //ec.europa.eu/comm/competition/mergers/legislation/nonhorizontalguidelines.pdf. (C.D.)