Merger Controls First Edition - J Sagar Associates

Attorneys at Law Borenius Estonia
as market situations in Estonia are sometimes totally different from those analysed by the Commission in its decisions
due to the rather small size of the whole Estonian territorial market.
Perhaps the most notable case from previous years in regard to the ECC’s assessment of a market and co-operation with
foreign competition councils is the ECC decision No 5.1-5/09-0040 of 29 September 2009, SIA Contact Holding/Ekspress
Hotline AS. The ECC, after conducting a thorough analysis of the directory media market, cleared a merger between two
major Estonian directory media companies. Both participants to the merger are active in providing yellow pages print
catalogues, internet directories and directory assistant services (telephone information).
In 2006, the ECC had also cleared a similar merger between two directory media companies. However, at that time the ECC
defined the relevant market as the market for directory media which consisted of the provision of services of yellow pages
catalogues, internet directories and directory assistant services. The ECC did not see the internet as a strong competitor to
directory media at that time, because the internet was just starting to compete with other sources of information.
In this particular case, the ECC began a Phase II investigation of the merger as the Phase I investigation showed remarkable
changes in the market situation compared to previous years. The ECC contacted other market participants, customers and
suppliers of the merger participants. Moreover, the ECC also contacted the competition authorities of other EU Member
States and analysed their case law on the relevant market definition. Apparently there was no unified market definition in
directory media services as the market situation in most Member States is quite different. For example, in Denmark two
different markets had been defined – the market for yellow pages print catalogues and the market for internet directories
and directory assistant services, while in Finland four different markets had been defined – the market for regional phone
catalogues, the market for business to consumer catalogues, the market for business to business catalogues and the market
for internet advertising. However, the ECC found similarities with the Dutch directory media market where the Dutch
competition authority had, the previous year, cleared a merger between two major directory media companies. The Dutch
authority left the market definition open and instead stated that the market for directory media is strongly influenced by
the worldwide internet search engines Google and Yahoo.
In the end, the ECC took the view that the relevant market is the market for directory media services. However, although
the market share after the merger of the two companies was 66%, the ECC stated that, as the internet is an important
competitor to other information sources, the big market share of the merger participants does not pose a serious threat to
the directory media market. The ECC also stated that big worldwide search engines - Google, Yahoo, Bing - which have
strongly entered the Estonian market, have to be taken into account while assessing the present situation and future
tendencies in the directory media market. Thus, the ECC cleared the merger unconditionally.
Key economic appraisal techniques applied
Similar to EU antitrust regulations, the ECA also states that the appraisal of a concentration should be based on the need
to maintain and develop competition, taking into account the structure of the goods markets and the actual and potential
competition in the goods market, including:
• the market position of the parties to the concentration and their economic and financial power and opportunities for
competitors to access the goods market;
• legal and other barriers to entry to the goods market;
• supply and demand trends for the relevant goods; and
• interests of buyers, sellers and consumers.
If the ECC concludes that the concentration has as its object or effect the co-ordination of the behaviour of undertakings,
which influences, or is likely to influence, competition, compliance of that activity should also be appraised. Appraisal
should include, for example:
• whether two or more undertakings who have created a joint venture will continue, to a material extent, their
activities in the same market as a joint venture, or in the previous or following affected market, or in another market
connected to that market; and
• whether co-ordination of behaviour, which is the direct result of the creation of the joint venture, gives the
undertakings, which created the joint venture, an opportunity to eliminate competition in the market or a significant
part of it.
The ECC will prohibit a concentration if it is likely to significantly restrict competition in the market, especially if it
creates or strengthens a dominant position. A dominant position under the ECA is presumed over a market share of 40%.
The ECC may also decide to revoke a decision to grant permission to a concentration if:
• the parties to the concentration submitted false, misleading or incomplete information which was a determining
factor for the decision; and/or
• the concentration was effected in violation of a term or other conditions or obligations stipulated by the ECA or the
decision to grant permission to concentrate.
However, revocation of permission to concentrate does not deprive the parties to the concentration of the right to apply
for new permission to concentrate.
Global Legal Insights ­ Merger Control First Edition
—60—
© Published and reproduced with kind permission by Global Legal Group Ltd, London
www.globallegalinsights.com