Transcript Merger controll and the integration and liberalisation of markets in the

BIICL Conference
London, 24 November 2006
Championing National Or European
Interests?
Merger control and the integration and
liberalisation of markets in the EU
Nadia Calviño
Deputy Director-General, DG Competition, European Commission
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Overview

Open, competitive markets are key drivers for growth in Europe:
Internal Market provides opportunities for expansion and
prosperity – Lisbon Agenda designed to accelerate this process.

Integration of markets implies that industrial restructuring can
take place across national borders.

Competitive process requires that industries can restructure as
they see fit – including by changes in ownership.

European industry is seizing these opportunities and integrating
at EU level and worldwide. Is there a “Europeanisation” of EU
industry? What is a national champion?
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EU cross-border mergers

Trends in EU cross-border mergers:
–
–

ECMR filing statistics: over 2/3 mergers notified to
Commission in 2000-2005 period were not
“domestic” (between firms within one Member
State)
Geographical source of company revenues: over
50% from “home markets” (within one Member
State) in 1997; less than 40% in 2005
Marked increase in cross-border mergers in
network industries (telecoms, transport –
postal and energy sectors).
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Merger control in regulated
markets

Important role of competition policy in the liberalisation of the Telecoms markets.

Ongoing liberalisation in the energy market:
- EU regulatory process: 2003 gas and electricity directives.
- Absence of real european energy markets: outstanding national regulations
and market structures.

Accelerating process of cross-border energy mergers + Commission’s sector
enquiry: Preliminary report identifies market concentration (national markets with
strong incumbents + vertical integration) as major concern.

merger control can facilitate energy market liberalisation by
–
ensuring that “horizontal” concentration does not impede effective competition by
strengthening incumbents
–
ensuring that “vertical” integration does not impede effective competition by foreclosing
access to national markets
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Energy mergers: horizontal
and non-horizontal effects
EFFECTS
 Unilateral effects, eliminating both:
– Actual competition (EDF/Suez (2006))
– Potential competition (EDF/ENBW (2001);EDF/ENI/GDP (2004))

Coordinated effects (VEBA/VIAG (2000))

Input foreclosure (EDP/ENI/GDP (2004); Eon/MoL (2005); GDF/Suez (2006)).

Customer foreclosure (EDP/ENI/GDP (2004))
REMEDIES

Traditional remedies: divestiture of production/distribution assets; severing of
ownership/supply links between competitors; gas/contract releases

“Ownership unbundling” remedies (i.e. structural separation into unaffiliated
entities): objective is to achieve vertical separation, thereby contributing to
market liberalisation – examples: Eon/MoL; DONG/Elsam/E2; GDF/Suez
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National or European
Champions?

Merger wave: Increasing numbers of transnational mergers.

EC merger control does not impede creation of European/global firms but aims
at protecting effective competition: productive efficiency and consumer welfare.

Complex assessment in regulated markets: Concentrated structure, vertical
integration, barriers to entry: The absence of an internal market.

Merger control is a powerful tool for reinforcing integration and liberalisation of
EU markets but it is not the only one.

The Commission has played a relevant role in liberalisation of regulated markets
(telecoms, rail, postal).

The need for an integrated European energy policy: Creation of a single market.
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