LLM International Merger Control

Interdisciplinary Centre for Competition Law and Policy (ICC)

Queen Mary, University of London

UK and German Merger controlCase Studies

Question 1

Beta is a UK-based company active in the production of domestic electrical appliances. Beta
is regarded as a market leader in the UK. It is a highly innovative company and is the holder
of a large body of patents and knowhow. Betas products are considered to be more
technologically advanced than the products of most of its competitors. The unique shiny black
look is a major source of customer attraction towards Betas products.

Beta supplies its products to a number of large UK wholesalers as well as all big UK retailers.
Beta has a market share of around 40% in the production and supply of domestic electrical
appliances in the UK. This market share has increased fairly steadily over the years. About 10
years ago, Betas market share was in the region of 30%. This in itself shows that Betas
competitors have been losing ground in favour of Beta.

Beta has recently concluded an agreement with Delta, one of its UK rivals. Delta has a market
share of 12% in the production and supply of domestic electrical appliances in the UK. Delta
is also active in the distribution of domestic electrical appliances in the UK through its
distribution arm. Under the agreement, Beta will acquire a 60% stake in Delta. Both companies
are thrilled at the prospect of this acquisition. Beta in particular believes this will enable it to
achieve important efficiencies as well as introduce serious competition in the distribution
market for domestic electrical appliances in the UK.

Beta and Delta would like to receive your advice regarding the compatibility of their operation
under the UK Enterprise Act 2002. The companies would like to know what procedural and
substantive issues they should be aware of under the Act. Specifically, they would like to know
whether they should notify their agreement to the UK Competition and Markets Authority
(CMA) and how the agreement is likely to be regarded on competition grounds.

Advise Beta and Delta on all relevant issues of procedure and substantive analysis
under the UK Enterprise Act 2002, indicating what further information you would
require from them in order to give detailed and comprehensive advice.
Question 2

Omega has approached you with a view to receiving your advice on a proposed merger
operation with Epsilon. Both Omega and Epsilon are based in Germany. The companies are
active in the production of different types of chemicals. They produce both heavy chemicals
used in the industrial and agricultural sectors as well as household chemicals used in various
domestic jobs, such as cleaning.

Omega has a market share of 32% in the production and supply of chemicals in Germany. Its
market share in the production and supply of heavy chemicals in Germany is around 36% and
its market share in the production and supply of household chemicals in Germany is 38%.
Epsilon has a market share of 26% in the production and supply of chemicals in Germany.
Epsilon has a market share of 29% in the production and supply of heavy chemicals and a
market share of 25% in the production and supply of household chemicals in Germany. In
addition to its involvement in the production of chemicals, Epsilon is the manufacturer of ink
products. Omega does not produce ink products as its business is focused exclusively on the
production of chemicals.

Omega and Epsilon have always had few competitors operating in their markets: two
competitors in the market for production and supply of heavy chemicals and three competitors
in the production and supply of household chemicals. The companies do not believe however
that their merger is likely to reduce competition in these markets. Moreover, they believe that
any loss of competition will most certainly be compensated by important efficiencies, which
the merger is likely to create. The companies have not said what form these efficiencies would
take.

Omega and Epsilon would like to receive detailed advice on all issues of procedure and
substantive analysis under German merger control law.

Advise Omega and Epsilon, indicating what further information would you require from
them?