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The prohibition of the proposed Springer-ProSiebenSat.1-Merger: how much economics in German merger control?

  • Budzinski, Oliver
  • Wacker, Katharina

We review the Bundeskartellamt (Federal Cartel Office Germany) decision on the proposed merger between Springer and ProSiebenSat.1 from an economic point of view. In doing so, it is not our goal to analyse whether the controversial decision by the Bundeskar-tellamt has been correct or flawed from a legal point of view. Instead, we analyse whether the economic reasoning in the decision document reflects state-of-the-art economic theory on conglomerate mergers. Regarding such types of mergers, anticompetitive effects either do not occur regularly or are more often than not overcompensated by efficiency gains, so that a standard welfare perspective demands reluctance concerning antitrust interventions. This is particularly true if two-sided markets, like media markets, are involved. However, anticompe-titive conglomerate mergers are not impossible, in particular in neighbouring markets where there is some relationship between the products of the merging companies. In line with the more-economic approach in European merger control, a particular thorough line of argumen-tation, backed with particularly convincing economic evidence, is necessary to justify a pro-hibition of a conglomerate merger from an economic point of view. Against this background, we do not find the reasoning of the Bundeskartellamt entirely convincing and sufficiently strong to justify a prohibition of the proposed combination from an economic perspective. The reasons are that (i) the Bundeskartellamt fails to continuously consider consumer and customer welfare as the relevant standards, (ii) positive efficiency and welfare effects of cross-media strategies are neglected, (iii) in contrast, the competition agency sometimes ap-pears to view profitability of post-merger strategy options to be per se anticompetitive (effi-ciency offence), (iv) the incontestability of the relevant markets is not sufficiently substanti-ated, (v) inconsistencies occur regarding the symmetry of the TV advertising market duopoly versus the unique role of the BILD-Zeitung and (vi) the employment of modern economic instruments appears to be underdeveloped. Thus, we conclude that the Bundeskartellamt has not embraced the European more-economic approach in the analysed decision. However, one can discuss whether economic effects are overcompensated in this case by concerns about a reduction in diversity of opinion and threats to free speech. Similar to the Bundeskartellamt, we do not consider these concerns in our analysis.

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Paper provided by University of Duisburg-Essen, Institute of Business and Economic Studie (IBES) in its series IBES Diskussionsbeiträge with number 160.

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Date of creation: 2007
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Handle: RePEc:zbw:udewwd:160
Contact details of provider: Postal: Universitätsstrasse 12, 45117 Essen
Phone: 0201 - 183 3633
Fax: 0201 - 183 2292
Web page: http://www.wiwi.uni-due.de/en/

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  1. Bum Soo Chon & Junho Choi & George Barnett & James Danowski & Sung-Hee Joo, 2003. "A Structural Analysis of Media Convergence: Cross-Industry Mergers and Acquisitions in the Information Industries," Journal of Media Economics, Taylor & Francis Journals, vol. 16(3), pages 141-157.
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  9. Oliver Budzinski, 2006. "An Economic Perspective on the Jurisdictional Reform of the European Merger Control System," Marburg Working Papers on Economics 200608, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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  11. Jose-Antonio Garcia; Damien Neven, 2005. "The attempted merger between General Electric and Honeywell, a case study of transatlantic conflict," IHEID Working Papers 06-2005, Economics Section, The Graduate Institute of International Studies.
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  20. repec:dgr:kubcen:199982 is not listed on IDEAS
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