At a speech in Paris on Monday, CMA Chief Andrea Coscelli outlined the findings of the Lear report - a retrospective look at how and on what basis the CMA's predecessor institutions analysed (and cleared) past digital mergers. Coscelli also announced a public call for input on how the CMA's Merger Assessment Guidelines (which date from 2010) might be updated for the digital age.
The report suggested there may have been gaps in past analyses but did not identify clear competitive harm as a result (and in fact pointed to some significant pro-competitive effects). Lear (an Italian economic consultancy commissioned by the CMA to carry out the study) also made several recommendations on how potential under-enforcement might be addressed.
Some were quite sensible, like investigating the monetization strategy of the target (if not currently profitable) or looking jointly at both sides of a two-sided market. Others were more far-reaching (and I think susceptible to unintended consequences), such as:
- conducting dawn raids to uncover evidence of plans for the target;
- accepting more uncertainty in the counterfactual (i.e. what is likely to happen absent the merger); and
- extending the time frame of two years currently used in the counterfactual (no suggestion was put forward as to what a longer period might be, but Snapchat was cited as still unprofitable after 7 years of operation).
On the same day across town, the French competition authority announced it was setting aside plans made last Autumn to introduce an ex-post merger tool targeted at the tech and pharma sectors that would allow it to review completed deals.
The decision came a day after the publication of its own study on EU competition policy. Instead, the French will push for an EU-level approach, advocating that the European Commission develop an ex-post review mechanism. The study's remit, however, is much broader than merger control. It also recommends an ad hoc committee made up of staff from several departments across the Commission (DG COMP, GROW, CONNECT and HOME) to supervise what it calls systemic digital players.
Interested parties have until 5 July to provide their views to the CMA.
While we have identified some gaps in the way that the Authorities analysed these cases, it is not always clear whether competitive harm has arisen as a result of such gaps.