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Case Study: European Competition Law

Term Paper 2006 6 Pages

Law - European and International Law, Intellectual Properties

Excerpt

Contents

1 The Facts of the Case

2 Article 81 and 82 EC
2.1 Article 81 EC
2.2 Article 82 EC

3 European Merger Control Regulation (EMCR)
3.1 The Function of the EMCR
3.2 Substantive review of the aquisition
3.2.1 The relevant market
3.2.2 The test of compatibility with the common market

4 Solution

5 Bibliography

1 The Facts of the Case

We have three companies; all of these produce concrete tiles for the Italian market. Milan Roofing Tile Inc. has got a market share on the Italian market of 35 percent, Rome Tile Inc. a share of 25 percent and Turin Tile Inc. of 40 percent.

Milan Roofing Tile Inc. made Turin Tile Inc. an offer to purchase Turin Tile’s business as a part of Milan Roofing Tile’s expansion strategy.

If Turin Tile Inc. assents there would be an horizontal acquisition (both companies are active on the same market, both produce concrete tiles)[1] with the consequence of a 75 percent share of the concrete tile market in Italy. Even if we include the market of shields and tiles which are produced of other materials they would have a high market share, because concrete tiles are the most used material for the roofs in Italy.

2 Article 81 and 82 EC

2.1 Article 81 EC

Art. 81(1) EC prohibits agreements, decisions and concerted practices that restrict the competition on the European Common Market.[2] Article 81 is out of question, because the two companies don’t make an agreement in accordance to this article – they plan to acquire.

2.2 Article 82 EC

Article 82 discusses a dominant position of an undertaking on the European Common Market. A dominant position can be defined as: “having such a economical power that a company is capable of behaving, to an appreciable extent, independently of its competitors and customers”[3] on the European Community market.

If Milan Roofing Tile Inc. acquire Turin Tile Inc. they would have a dominant position on the Italian concrete tile market. But article 82 can only be used in a “ex post” position.[4] That means the companies have to accomplish the acquisition. In the present case the companies plan the acquisition. Consequently we have to deal with a “ex ante” position.

3 European Merger Control Regulation (EMCR)

3.1 The Function of the EMCR

The function of the EMCR is the “ex ante” control of mergers and acquisitions. The question is: Will the European Common Market be less competitive and consequently disadvantageous for the consumers or not after a certain merge or acquisition?.[5] As well as in Article 82 EC the issue of the dominant position of a company as well as the compatibility with the European Common Market are in the focus of the EMCR.

3.2 Substantive review of the acquisition

3.2.1 The relevant market

The relevant product market is divided into a product and a geographic market.

“A relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products' characteristics, their prices and their intended use.”[6]

In our case the relevant product market is the whole tile as well as the shingle market independent of the material of which they consist, because both have the same function.

“The relevant geographic market comprises the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighbouring areas because the conditions of competition are appreciably different in those areas”.[7]

[...]


[1] Piilola (18.01.2006), p.24.

[2] Piilola (17.01.2006), p.16.

[3] O´Connor (1995), p.124.

[4] Piilola (17.01.2006), p.18.

[5] European Commission, [WWW document].

[6] European Commission, [WWW document].

[7] European Commission, [WWW document].

Details

Pages
6
Year
2006
ISBN (eBook)
9783638542029
File size
362 KB
Language
English
Catalog Number
v60555
Institution / College
University of Tampere
Grade
2 Germany, 3 Finland
Tags
Case Study European Competition

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Title: Case Study: European Competition Law