Close Competitors in Merger Review

The analysis of unilateral effects in horizontal mergers — especially on markets for differentiated goods — can take into consideration the extent to which the merging firms are close competitors. The elimination of a close competitor can result in an upward pricing pressure (UPP) on the merged firm which can harm consumers. Although a quantitative UPP analysis is an important enhancement of substantive merger appraisal, it should not be considered sufficient in itself for the finding of a significant impediment to effective competition in terms of Article 2 of the EU Merger Regulation (EUMR). Rather, market definition and the analysis of the market structure including market shares should generally constitute the backbone of any theory of harm.