Competition Policy and Efficiency Claims in Horizontal Agreements

Efficiency claims play a key role in the analysis of mergers and horizontal agreements. Static efficiencies, associated with the production and distribution of existing products, are most often considered relevant. Dynamic efficiencies, of improved processes and products, are also important, but they are inherently more difficult to estimate. Efficiencies tend to play a larger role in analysis of horizontal agreements than in analysis of mergers. There are significant differences across countries in how efficiencies are factored into merger analysis, but there are also broad similarities. Most agencies do not reach consideration of efficiencies unless it is clear that a merger will tend to have anti-competitive effects. In such a case, the parties usually have a significant responsibility to establish that the merger should nevertheless be approved because it promises to yield significant efficiencies that cannot be obtained in less anti-competitive ways. Some countries apply a “consumer surplus” standard. Others apply a “total surplus” standard, which would approve a merger if the real resource savings will cause producers to gain more from the merger than consumers will lose from it. Because competition authorities face an inherent informational disadvantage, efficiency claims and supporting evidence must be assessed with caution. This document comprises proceedings in the original languages of a roundtable on Efficiency Claims in Mergers and Other Horizontal Co-operation Agreements which was held by the Committee on Competition Law and Policy in November 1995. It is published as a general distribution document under the responsibility of the Secretary General of the OECD to bring information on this topic to the attention of a wider audience. This compilation is one of several published in a series named “Competition Policy Roundtables.”