Comments on the Church Report and its Implications for Non-Horizontal Merger Guidelines

Prepared by the Commission on Competition

The International Chamber of Commerce (ICC) greatly appreciates the opportunity to provide comments on The Impact of Vertical and ConglomerateMergers on Competition by Dr. Jeffrey Church (hereafter, the “Church Report”).

The issuance of Non-Horizontal Merger Guidelines by the European Commission would constitute a major development in the Commission’s policies and would have wide-ranging effects on business conduct and, accordingly, future economic development and welfare of the marketplace.

Therefore, we are gratified that the Commission recognizes the importance of fully exploring the economic underpinnings of any such Guidelines.

The Church Report provides a detailed and in-depth survey of the theoretical economic literature on possible competitive harms that can potentially arise in vertical and conglomerate mergers.
This is an important and necessary first step in the development of a useful and informative set of vertical and conglomerate merger Guidelines, and we applaud the Commission for initiating such a survey.
However, to rely too heavily on a survey of the economic literature without practical guidance based on empirical evidence and prior experience could inadvertently create unnecessary uncertainty and deter potentially beneficial transactions.
This report therefore attempts to assist the Commission in putting this economic survey into context and bridging the gap between economic theory and public policy considerations. The objective of this paper is to aid the Commission in designing a set of Guidelines that are useful, informative, and consistent with modern economic theory and desirable public policy.