THE COUNCIL ,
HAVING REGARD to Article 5 b) of the Convention on the Organisation for Economic Co-operation and Development (OECD) of 14 December 1960;
HAVING REGARD to the standards developed by the OECD in the area of competition law and policy, and particularly on international co-operation in competition investigations and proceedings, transparency and procedural fairness in competition law enforcement, and competitive neutrality;
CONSIDERING that merger control is a key component of competition regimes as it prevents harm from anti-competitive transactions that might reduce competition;
CONSIDERING the importance of well-reasoned decision-making, and efficient procedures to ensure effective and transparent merger control, as well as the value of competitive neutrality and international enforcement co-operation in fostering efficient merger review, and supporting consistent outcomes;
RECOGNISING the importance for competition authorities to have sufficient flexibility to address changing market realities and business models, including, for example, those presented by the digitalisation of the economy;
RECOGNISING the important work by other entities in the area of merger review, in particular that of the International Competition Network;
RECOGNISING that Members and non-Members adhering to this Recommendation (hereafter the “Adherents”) have different legal and institutional frameworks through which they will implement this Recommendation.
On the proposal of the Competition Committee:
Merger review framework
I. RECOMMEND S that Adherents have a clear legal framework for merger review to be effective, efficient, and timely. To that effect, Adherents should:
1. Provide the powers and resources necessary for the effective enforcement of merger laws.
2. Ensure appropriate powers are in place to obtain sufficient information to assess the implications of a merger, while at the same time setting reasonable information requirements and avoiding imposing unnecessary costs and burdens on merging parties and third parties.
3. Conduct merger reviews and take decisions within a reasonable and determinable time frame, considering the characteristics of the merger under review and the timely submission of necessary information by merging parties.
4. Use a clear framework for analysis based on legal and economic principles that take into account:
a) the particularities of the transaction and market dynamics; and
b) developments in economic analysis, as well as best practices.
5. Conduct a merger review in a manner that is neutral to the seat of the merging parties.
Merger notification and review procedures
II. RECOMMENDS that Adherents provide clear principles applicable to merger notifications and review procedures. To that effect, Adherents should:
1. Have a clear definition of reviewable mergers, including guidance on the definition of control, where relevant, and the calculation of notification thresholds and jurisdictional tests.
2. Use clear and understandable criteria to determine whether and when a merger must be notified or, in absence of mandatory notification requirements, whether and when a merger will qualify for review.
3. Adopt a standstill obligation in ex-ante, mandatory regimes.
4. Consider reviewing periodically the merger notification thresholds in mandatory merger regimes and the criteria on whether and when a merger qualifies for review in voluntary ones.
5. Consider having appropriate tools to review mergers that do not meet notification thresholds but could result in harm to competition.
6. Assert jurisdiction only over those mergers that have an appropriate nexus with their jurisdiction.
7. Consider procedures to ensure that mergers that are unlikely to raise competition concerns can be subject to expedited review, subject to the competition authority’s discretion to undertake a more detailed review if appropriate.
8. Provide for the possibility of pre-notification discussions when appropriate.
Merger Analysis
III. RECOMMENDS that Adherents ensure that merger assessment is effective and transparent. To that effect, Adherents should:
1. Rely on a clearly defined substantive framework to assess the implications of a merger, including by reviewing whether a merger may, inter alia, lead to:
a) unilateral effects, as it creates or strengthens market power for the merging firms, and/or substantially reduces competition. A merger may significantly harm competition by eliminating or reducing competitive pressure from a current or potential competitor. A merger may also harm competition in cases where one of the merging firms already has a position with substantial market power and the merger may lead to the entrenchment or extension of that position. Unilateral effects may result from a merger between rivals or potential rivals (“horizontal” mergers) or from a merger between firms that are not rivals or potential rivals (“non-horizontal” mergers);
b) co-ordinated effects, as it increases the likelihood of anti-competitive co-ordination between some or all market players, or makes existing co-ordination more stable or effective, explicitly or tacitly. For example, a merger may reduce the number of market participants; increase the similarities between firms or make leader-follower co-ordination more likely; eliminate or change the incentives of a maverick (or firm with a disruptive presence); increase transparency; create structural or commercial links between competitors such as minority shareholdings, cross-board memberships or commercial agreements; reduce incentives to innovate or invest in capacity expansion; or increase multi-market contacts. Like unilateral effects, co-ordinated effects may result from either “horizontal” or “non-horizontal” mergers;
c) other effects, typically caused by “non-horizontal” mergers, as it increases the risk of foreclosure in any of the markets impacted by the merger, notably if the merged firm can harm competition by (i) limiting or degrading access to a product, service or route to market that its rivals may use to compete, (ii) limiting rivals’ access to a customer base, (iii) accessing and using its rivals’ competitively sensitive information, or (iv) otherwise leveraging its market position from one market to another, related market.
2. Take into account, inter alia and according to the applicable legal framework, whether the merger (i) is part of a series of multiple mergers or a trend toward industry consolidation, (ii) involves multi-sided platforms or competition between ecosystems, (iii) has effects on innovation (including reducing incentives to innovate) or dynamic competition, (iv) increases buyer power or co-ordination among buyers for goods and services resulting in harm to competition, and/or (v) involves the acquisition of minority or partial control, or common ownership.
3. Consider market definition as one useful step in the assessment of a merger, although this step may not be necessary in every jurisdiction.
4. Rely on appropriate methodologies to assess a merger, depending on its particularities, which may include the market structure and how it would change as a result of the merger, the calculation of market shares and market concentration, the assessment of the impact of mergers on the capabilities or incentives of the merging parties or competitors, and the prediction of harm (such as price increases or worsening of non-price factors) that would follow a lessening of competition caused by the merger.
5. Continually seek to expand and adapt methodologies to better fit market realities.
6. Assess the implications of a merger across key strategic variables of competition such as prices, quality, capacity, output, innovation, dynamic competition, product variety, and data, depending on the particularities of the merger.
7. Use appropriate and available evidence to assess the implications of a merger such as third-party views and internal documents of the merging parties created in the ordinary course of business.
8. Take into account actual and potential competition when analysing a merger, including the closeness of competition between merging firms when both are active in the same market, as well as potential competition, when one of the firms is a potential competitor in the market of the other.
9. Consider whether there are any constraints, including the existence of alternative suppliers or likely, timely, and sufficient entry or expansion of competitors, on the ability of merging parties to exercise market power, co-ordinate their behaviour or foreclose rivals after the implementation of the merger.
10. Acknowledge that the review of mergers involves a certain degree of uncertainty, which varies according to the characteristics of each transaction, and that uncertainty does not by itself reduce the likelihood that a merger could give rise to competition concerns.
11. Evaluate substantiated claims by the merging parties, as follows:
a) For procompetitive efficiencies claims, consider whether they are merger-specific, likely, timely, verifiable, and offset the harm to competition.
b) For claims that one merging party is likely to fail and its assets will cease playing a competitive role in the market without the merger, require, inter alia, evidence that the business was likely to have exited and the existence of less anti-competitive alternative buyers or other options for reorganisation are not viable, and that the exit of the firm’s assets would cause more harm to competition than the merger.
Remedies
IV. RECOMMENDS that Adherents provide clear guidance for the design, assessment, and adoption of remedies. To this effect, Adherents should:
1. Accept remedies that resolve entirely the competition concerns resulting from the merger and are capable of being implemented and monitored effectively.
2. Explain the type(s) of remedies accepted as well as any preferred remedies, as set out in the legal framework; the policy objectives and procedures used to evaluate remedies; and the mechanisms for monitoring and compliance with remedies.
3. Prioritise structural remedies over behavioural ones and, for structural remedies, prioritise the divestiture of standalone businesses.
4. Adopt or seek a prohibition decision if there is no remedy available that would fully resolve the identified competition concerns.
5. Co-operate with other reviewing jurisdictions on remedy design and implementation in transnational mergers, so as to bolster their effectiveness while avoiding inconsistencies.
6. Ensure that remedies are effective in light of market dynamics and applicable sectoral regulation.
Ex-post assessment
V. RECOMMENDS that Adherents consider performing ex-post assessment of merger decisions and merger remedies.
VI. INVITES the Secretary-General and Adherents to disseminate this Recommendation.
VII. INVITES non-Adherents to take account of, and adhere to, this Recommendation.
VIII. INSTRUCTS the Competition Committee to:
a) serve as a forum to exchange information and experiences with respect to the implementation of this Recommendation, in particular to promote best practices for merger review;
b) consider developing a toolkit to support Adherents’ implementation of this Recommendation; and
c) report to Council on the implementation, dissemination and continued relevance of this Recommendation no later than five years following its revision and at least every ten years thereafter.