M.1845 - AOL / TIME WARNER

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Contents

M.1845 - AOL / TIME WARNER

Introduction

The EU Merger Case-Law Database by www.mergercontrol.net and www.mergerdata.net is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License (CC BY-NC-SA 3.0 US). Attribution should be given by citing the sources, i.e. The EU Merger Case-Law Database, version 2.0, www.mergercontrol.net.

General Information

Case: M.1845 - AOL / TIME WARNER

Notification date: 20000428

Decision: 8(2)co (Common terminology according to current ECMR)

Decision date: 20001011

Date of 6.1 c decision: 20000619

Industry classification:

The Commission’s decision (English version): http://ec.europa.eu/comm/competition/mergers/cases/decisions/m1845_en.pdf

The Commission’s pressrelease: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/00/1145

Transaction value (estimate in MEUR): 339640.951

Media and press-releases:

Description of the concentration

The following information is provided by the notifying parties in section 1.2 of Form CO.


Type of merger and general concerns

Category: Horizontal merger

Main competitive concern identified: Single dominance problems in other markets aswelll, no market shares accounted for

Theory of harm – possible competitive effect(s)
Single dominance Unilateral effect Collective dominance Vertical effect Multi-market effect
YES NO NO NO NO

Firms involved in the transaction

Parties to the transaction
Case: M.1845 Notifying firm 1 Notifying firm 2 Target 1 Target 2 Target 3
Firm(s) America Online Inc Time Warner
Nationality US US
Global turnover 4780 25600

Webpage of notifying firm: [1]

Phase I decision

Date of decision to initiate Phase II: 20000619

Preliminary category: (final category: Horizontal merger)

Main concern identified in Phase I: Single dominance problems in other markets aswelll, no market shares accounted for

Most problematic market identified in Phase I:


Relevant markets identified

Relevant markets
Relevant market Combined marketshare (min) Pre-merger HHI Delta HHI
Market 1 The EEA market for online music 20 400 200-800
Market 2
Market 3


Main findings in the first relevant market

The tables below show the Commission’s main findings in the first relevant market. For the issues investigated, a YES indicates that the issue was found in that market and a NO indicates that the issue was not found in that market.

Elimination of competition

Main findings in Market 1
Merger eliminates a potential future entrant:
Merger eliminates a recent entrant:
Merger eliminates a "maverick":
Merging firms are close competitors:


Factors conducive to coordination

Factors conducive to coordination
Unstable market shares:
Symmetric market shares post-merger:
Symmetric costs in the market post-merger:
Symmetric capacities in the market post-merger:
Transparency (easy to monitor competitors):
Deterrent mechanism (retaliation possible):
Past coordination:
Excess margins/profits:
Import competition:


Incentives for price increases

Incentives for price increases
Customers have large switching costs:
Capacity constraints (among competitors):
Inelastic demand:
Increasing industry/demand:
Declining industry/demand:
Fast technological development/innovation:
Historical abuse of dominance:


Entry barriers

Entry Barriers
High entry barriers:
New competitors cannot enter within two years:
New entry cannot defeat competitive concerns:
Scale economies prevent entry:
Essential facilities prevent entry:
Intellectual property rights prevent entry:


Non-horizontal factors

Non-horizontal factors
Purchasing power:
Countervailing buyer power exist (among the merged entities' customers):
Likely input foreclosure post-merger:
Likely customer foreclosure post-merger:
Multi market contact:


Efficiency gains

Efficiency gains
Large efficiencies result from the merger:
Failing firm evidence (rescue merger, i.e. one of the parties is insolvent):


Additional information

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