News
Analysis Group Consultants Propose a “Theory of Benefits” for Weighing Efficiencies in EU Merger Review
To date, the European Commission’s Directorate-General for Competition (DG COMP) has never formally cleared a transaction solely on the ground of efficiencies and has largely treated efficiency claims as unsubstantiated for lack of rigorous supporting analysis. In turn, merging parties have been reluctant to invest substantially in putting forth well-documented efficiency arguments. Parties may also have been concerned that, historically, putting forward efficiency arguments may have signaled an admission of competitive concern. The result is a self-reinforcing equilibrium in which neither side invests in the analysis.
However, the Commission’s Draft Merger Guidelines, by encouraging the early submission of Theories of Benefits, may offer a way out of this situation. In an article published in CPI Antitrust Chronicle, Analysis Group Competition Expert Pierre Régibeau and Vice President Cyril Hariton argue that the Draft Guidelines are more than a symbolic gesture. Drawing on more than 25 years of experience assisting with and reviewing merger filings, the authors note that a sound acquisition decision should already rest on rigorous analysis of expected benefits, so the business case supplies much of the raw material. They then outline how to turn that work into a credible submission, covering the principal sources of merger benefits and the evidence that can support each. They also stress presenting these claims as a coherent narrative that is consistent with how the transaction was presented to the financial community and developed before the deal is announced.
Finally, the authors explain how to calibrate the effort to the expected difficulty of the review. They recommend a basic translation of the business case for straightforward transactions, a more developed “light story” where remedies may be needed, and a comprehensive Theory of Benefits where significant competitive concerns are likely.
Associated People
Cyril Hariton
Vice PresidentDr. Hariton specializes in the application of industrial organization and competition economics to merger control, antitrust and competition, state aid, and regulatory matters, including extensive work in large-scale merger investigations and competition litigation before the European Commission and national competition authorities. He previously served as an economist at the European Commission’s Directorate-General for Competition (DG COMP). Dr. Hariton has advised on more than 75 merger reviews, including those of Halliburton/Baker Hughes, Dow/DuPont, Bayer/Monsanto, and Salesforce/Slack by the US Department of Justice (DOJ), as well as antitrust cases involving Intel, Servier, and Glaxo Wellcome. His experience includes work on state aid, damages estimation, and regulatory proceedings, as well as work on Digital Services Act fee challenges and foreign subsidies regulation. Dr. Hariton also brings distinctive expertise as a forensic IT expert, having assisted in multiple inspections and investigations. He has published in journals including the Review of Industrial Organization, the Journal of Public Economic Theory, the Journal of Regulatory Economics, the Journal of the Japanese and International Economies, Revue Économique, and Recherches Économiques de Louvain, and has contributed to European Commission consultations and newsletters. Dr. Hariton previously served as an assistant professor at Toulouse Business School and as a research fellow at UCLouvain.
Pierre Régibeau
Competition ExpertDr. Régibeau, the former chief competition economist at the European Commission’s Directorate-General for Competition (DG COMP), is an expert in industrial organization, with a particular focus on technology-intensive industries, intellectual property (IP) rights, and competition policy. His areas of specialty include the economics of digital platforms and innovation, vertical restraints and abuse of dominance, and international trade. His consulting experience includes advising on a wide variety of cases before courts and competition authorities throughout Europe, North America, Asia, South Africa and Australia.
Dr. Régibeau has held teaching and research positions at institutions that include the MIT Sloan School of Management, the Kellogg School of Management at Northwestern University, and a number of European universities. He has published extensively in leading journals and was a member of the editorial board of The Journal of Industrial Economics for 12 years. For more than a decade, he has taught a course on the intersection of IP rights and competition policy at the CRESSE Summer School on Competition Policy and Regulation. Dr. Régibeau has also served as a member of the Economic Advising Group on Competition Policy at the European Commission. From 2019 to 2023, he served as Chief Competition Economist at the European Commission.