ZWeR 2006, 107

RWS Verlag Kommunikationsforum GmbH, Köln RWS Verlag Kommunikationsforum GmbH, Köln 1611-1982 Zeitschrift für Wettbewerbsrecht ZWeR 2006 AufsätzeGötz Drauz / Michael König*

The GE/Honeywell judgement: Conglomerate mergers and beyond

The CFI's judgement in the merger case GE/Honeywell was the last outstanding and long awaited ruling in a series of appeals against high profile merger prohibition decisions, which included Airtours, Schneider and Tetra. On 14th December 2005, the CFI completed this series with its judgement in the appeal cases T-210/01 – GE v. Commission and T-209/01 – Honeywell v. Commission. This article approaches the judgement from a legal background and explores the importance and guidance value of the CFI's various findings in relation to the existing merger control case ZWeR 2006, 108law.

I. Introduction
II. Overview of the procedure before the Commission and the Court
- 1. The Commission decision in case M. 2220 GE/Honeywell
- 2. The appeals lodged against the Commission's decision
- 3. The CFI's judgements
III. The main findings of the judgement and their consequences for merger control policy in the future
- 1. Standard of proof and scope of judicial review
- 2. Establishment of dominance and horizontal effects
  - 2.1 The significance of market shares
  - 2.2 The “bidding market defence'' as a factor relativising market share?
  - 2.3 The threshold for dominance: Market power despite competitive action on the market
  - 2.4 Vertical integration as a reinforcing element of market power: The role of GE Capital and GECAS
  - 2.5 Can small market share increases lead to a strengthening of an existing dominant position?
  - 2.6 Conclusions on dominance and horizontal effects
- 3. Vertical and conglomerate effects
  - 3.1 The role of Art. 82 EC
    
    3.1.1 Background: The Tetra-Saga
    
    3.1.2 The CFI's interpretation of the ECJ's findings on Art. 82 EC
    
    3.1.3 Art. 82 EC in non-horizontal cases – an ambiguous concept
    
    3.1.4 Conclusion on the role of Art. 82 EC
  - 3.2 Assessment and evidential requirements for conglomerate effects
    
    3.2.1 The CFI's analytical approach
    
    3.2.2 The evidential requirements for the different leveraging practices
    
    3.2.3 The future of enforcement in conglomerate merger cases
  - 3.3 Remedies
    
    3.3.1 Remedies negotiations
    
    3.3.2 Remedies to address conglomerate problems
    
    3.3.3 Structural remedies to address horizontal issues
  - 3.4 Procedural issues
    
    3.4.1 Access to the file
    
    3.4.2 Precedent value of former decisions and findings of other authorities
IV. Conclusions

*: *)
Götz Drauz is partner at Howrey LLP, Brussels. At the time of the Commission decision in the GE/Honeywell case, he was Director of the European Commission Merger Task Force. Dr. Michael König is a senior lawyer at the Competition Division of the OECD seconded from DG Competition of the European Commission. The views expressed are purely personal to the authors and do not represent any official position of the organisations they belong(ed) to. The authors would like to thank Guillaume Loriot at DG Competition for his valuable thoughts and contributions.

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