Vertical mergers – the European guidelines on non-horizontal mergers and their relevance for South Africa

Abstract

There has been a long and heated debate in the world of antitrust about the likely effects of vertical integration on competition and welfare. The publication of the European Commission’s Guidelines on the assessment of Non-horizontal mergers in November 2007 has again brought this debate into the spotlight. Competition authorities find themselves faced with the complex task of balancing the potential pro-competitive efficiencies of these mergers against the concerns that, in some circumstances, vertically-integrated firms could use their presence at multiple levels of the production chain to strategically soften competition. This paper outlines the current thinking on vertical mergers as presented in the Guidelines and examines, through an evaluation of a past Competition Tribunal decision, how the South African competition authorities have handled the complexities presented by vertical transactions.