Brussels, 13th February 2007
Mergers: Commission launches public consultation on draft Merger Guidelines for companies in a vertical or conglomerate relationship
The European Commission has launched a public consultation on draft Guidelines for the assessment of mergers between companies that are in a so-called vertical or conglomerate relationship (also known as "non-horizontal mergers"). Such mergers are aimed at broadening a company's activities either by merging with a company at another level of the supply chain (vertical merger) or with a company active in a separate but related market (conglomerate merger). Interested parties are invited to submit their comments on the draft Guidelines by 12th May. Following the consultations, the definitive version of the Guidelines will be adopted by the Commission. The Guidelines will then serve to provide guidance to companies envisaging such types of merger.
Competition Commissioner Neelie Kroes said: "The drawing up of these Guidelines shows once more the Commission's commitment to providing clear and predictable guidance for businesses. We underline that the majority of vertical and conglomerate mergers do not raise problems, but we will act decisively against transactions that harm competition."
The non-horizontal Merger Guidelines will complement the existing Guidelines on horizontal mergers (see IP/03/1744), which deal with mergers of companies who compete on the same markets. Non-horizontal mergers include vertical mergers, such as the acquisition of a supplier by a customer, for example a furniture manufacturer acquiring a wood supplier, and conglomerate mergers, which concern companies whose activities are complementary or otherwise related, for example, a company producing razors buying a company producing shaving foam.
Horizontal mergers – i.e. those between competitors on a particular market - lead to a loss of direct competition between the merging firms. By contrast, vertical and conglomerate mergers - i.e. between companies active in subordinated or related markets - do not immediately change the number of competitors active in any given market. As a result, the main potential source of anti-competitive effects in horizontal mergers is absent from vertical and conglomerate mergers. They are thus generally less likely to create competition concerns than horizontal mergers. In addition, vertical and conglomerate mergers may also improve efficiency.
The draft Guidelines provide examples, based on established economic principles, of where vertical and conglomerate mergers may significantly impede effective competition in the markets concerned. For instance, they outline the circumstances under which a vertical merger could be likely to result in competing companies being denied access to an important supplier or facing increased prices for their inputs and thus ultimately lead to higher prices for consumers. The draft Guidelines also provide “safe harbours”, in terms of market share and concentration levels below which the Commission is unlikely to identify competition concerns. This will enable interested parties to identify more easily such mergers.
The public consultation will be open for three months and the Commission invites all interested parties to submit their observations by 12 May 2007. The draft Guidelines can be found on the website of the European Commission at: