In contrast to e.g. the UK Office of Fair Trading, the European Commission so far has not applied UPP-type approaches in phase I merger enquiries. However, a Commission submission to the OECD earlier this year indicates that it is keeping its options open. This post discusses frequently asked questions regarding the concept of UPP and its use.
What is UPP?
UPP (Upward Pricing Pressure) is a tool with which it is possible to estimate the risk of a merger giving rise to unilateral effects. Unilateral effects may result from a merger between A and B because customers that would switch between A and B in response to a price increase are, post-merger, “internalised” by the merged entity. Bec [...]
In late January, the Commission finally published the non-confidential version of its decision in Unilever/Sara Lee Body Care (adopted in November 2010). The decision, reached after a Phase II investigation, is notable because it marks the first time in many years where the Commission objects to a proposed merger on the basis of, among other pieces of evidence, a merger simulation.
The key area of overlap between the Parties was in deodorants. After having decided that separate markets existed for male and non-male deodorants, the Commission found that the Parties were close competitors with regard to certain brands and that Sara Lee contributed to important innovations in the market. [...]
On 17 October, the Commission published a revised version of its Best Practices for the submission of economic evidence and data collection in competition cases (“BP”). The first version of the BP, published in January 2010, included guidance on issues such as the way relevant questions in economic submissions should be formulated, choice of methodology, reporting the results, conducting robustness checks, and responding to requests for quantitative data. Compared to the initial draft, the new version of the BP contains relatively few changes. However, the changes that have been made are worth noting.
The most important addition to the new version is the inclusion of some guidance on con [...]
