The control of concentration movements in order to avoid originating dominant position: the commitments in particular

Maria José Cardoso / Noémia Teles / José Neves Cruz

Keywords

Antitrust, market power, competence, competitive advantage, monopoly; commitments

Abstract

Global competition challenges firms and corporations to innovate and to develop competitive advantages in order to achieve market power. One of the major strategies involves acquisitions or mergers with competitors (horizontal concentration) or between firms located at different stages of the production and distribution chain (vertical) or between firms operating in markets that are not directly related (holdings). There are multiple motivations for these concentration movements, and among them is the achievement of market power in order to obtain a dominant position or the purpose of exclusive control (or access) to some kind of resource. These two motivations can cause severe damages to consumers, especially in terms of abuses of monopolistic dominance. So, competition authorities are extremely cautious in controlling concentration operations (ex-antecontrol). If it is expected that a merger may originate a dominant position for the merged company, it will not be authorized. To avoid this kind of decision, the parties involved in the operation of concentration might propose commitments that ensure the dominance will be missed. Then authorities have to ensure the monitoring of compliance with commitments (ex-post control), otherwise some problems may arise.