Merger Controls First Edition - J Sagar Associates

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European. The district court did accept the DCA’s reasoning that an increase in buyer power is only problematic if it leads
to a deterioration of the position of customers.
Key economic appraisal techniques applied
During the reference period (2010/2011) there have been no cases in which the DCA has introduced new economic
methodologies for assessing the effects of a concentration, although a number of decisions are notable in light of the
economic theories posed by the DCA.
An example is the Sandd – Selekt Mail case, 12 in which the DCA assessed the acquisition of Selekt Mail by Sandd. Both parties
are active in the Dutch postal delivery sector. The DCA cleared the decision in the first phase, despite the fact that the
concentration concerned two of the three biggest parties active in the relevant market and would, in effect, mean that only two
nationally active competitors remain. The DCA furthermore conceded that the concentration was likely to lead to an increase
in prices for the relevant postal delivery services. However, according to the DCA, there was no causal link between the
concentration and possible limitation of competition. Firstly, according to the DCA, it was unavoidable that Selekt Mail would
leave the market eventually. This conclusion was based upon internal documents of Selekt Mail’s shareholder, Deutsche Post,
indicating that it was preparing to withdraw Selekt Mail from the market. The DCA furthermore concluded that no alternative
scenarios existed that would be less damaging to competition since there were no indications that a new player would enter the
market or that any party besides Sandd was willing to acquire Selekt Mail.
In the Veolia/CDC Transdev case, 13 which concerned the Dutch bidding market for public transport concessions, the DCA
cleared the merger of Veolia and Transdev following a second phase investigation. It is interesting to note that the French
competition authorities in the same case decided that remedies were necessary. The DCA took a number of factors into
account in its decision, including the fact that: (i) it concerned a bidding market, meaning that the market shares of parties
at a certain moment did not necessarily give an accurate picture of their competitive position; (ii) the presence of competing
bidders only has a limited impact on the decision whether or not to participate in the tender and on the content of the bid
offer, because parties in practice would assume that other serious competitors are also submitting an offer anyway and
because the bidding process is quite complicated; and (iii) there are no significant barriers to entry. In particular the last
two arguments of the DCA are noteworthy and have been criticised. 14 The DCA came to the conclusion that competitive
pressure has only a limited effect on the outcome of a tender, without carrying out any quantitative study into, for instance,
the relationship between the number of bidders in a tender and the amount of the winning bid, or how often Veolia and
Transdev came out at first and second place in the tender procedures in which they competed. The reasoning of the DCA
that there are low barriers to entry also does not appear to be backed up by a thorough investigation. The recent market
entry, to which the DCA referred, was by a company owned by the main railway company in the Netherlands. Furthermore,
although market parties indicated that they, in principle, are keen to participate in all tender procedures, in practice there
are a number of instances in which only few parties submitted a bid.
Approach to remedies (i) to avoid second stage investigation and (ii) following second stage investigation
In general, the DCA has recently shown a preference for a relatively short first phase without significant delay and the
standard for reaching a second phase is in practice not very high. This is illustrated by the relatively high number of
decisions during the reference period (2010/2011) in which the DCA concluded that a second phase investigation would
be necessary, particularly compared to previous years.
As a result, in order to avoid a second phase investigation, parties to a concentration, which possibly leads to competition
issues, will generally have to offer remedies in the first phase which clearly remove any competition issues.
A recent example of a case which was cleared in the first phase after remedies were offered by the parties, was the
acquisition of the commercial TV channels of SBS by Sanoma, a publisher of several magazines and Talpa, a TV production
company. 15 Pursuant to the transaction, Talpa would acquire a 33% interest in SBS. The DCA considered Sanoma and
Talpa to acquire joint control over SBS in light of the fact that Talpa would have veto rights in respect of fundamental
changes to the channel profile of the SBS TV channels and would be able to appoint or dismiss the programming director.
Talpa is active as a producer of television products and holds a minority interest in RTL, an important competitor of SBS
in the television market. Although the DCA had, in a previous case, concluded that the interest of Talpa in RTL did not
result in control over RTL, the DCA held that it could not exclude that Talpa would be able to influence the commercial
policy of RTL in such a manner as to exclude competing TV production companies and to exchange commercially sensitive
information between SBS and RTL. In light of these concerns, parties offered remedies consisting in Talpa selling its
shareholding in RTL within a period of three years.
The DCA has furthermore shown a clear preference for structural remedies as opposed to behavioural remedies. During the
reference period (2010/2011), it has in one case accepted behavioural remedies offered by the parties. 16 This case concerned
the acquisition by Vodafone of BelCompany, the owner of offline and online retail outlets for the sales of mobile phones,
laptops, tablets and accessories and active as an intermediary for telecommunications contracts (such as mobile phone and
internet subscriptions). Although the DCA concluded that the horizontal and vertical effects of the concentration would not
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