EU Merger Control and Non-Controlling Minority Shareholdings: The Case Against Change
After several years of debate fuelled by the General Court’s confi rmation in Aer Lingus1 that the EU Merger Regulation2 does not apply to the acquisition of non-controlling minority shareholdings,3 the European Commission (the Commission) has proposed expanding the EUMR to capture such transactions on the ground that the Commission “does not seem to have the tools to systematically prevent anticompetitive effects deriving from such structural links”.4 The Commission’s proposal raises two principal questions—is there a material gap in the EUMR’s scope of application and, if there is, is that gap large enough to justify subjecting a potentially signifi cant number of transactions to EU merger control? As with any expansion of regulatory oversight, the burden rests on the agency proposing such expansion, in this case the Commission, to demonstrate the need for change. The Staff Working Document acknowledges the existence of only “limited” empirical evidence of anticompetitive harm arising from
The Anticompetitive Effect of Passive Investment
There are many cases in which a firm passively invests in its competitor. The Article presents an economic analysis resolving several ambiguities in the economics literature and showing how even totally passive investment in a competitor, in an industry with only a few firms, may substantially harm competition. In particular, passive investment will raise prices even when firms are not colluding. Moreover, passive investment by an inherently aggressive competitor in its rival facilitates collusion. Furthermore, when it is a firm's controlling shareholder who invests in the firm's competitor, the smaller the controller's stake in the firm it controls, the greater the anticompetitive effect. The Article further shows how firms can replicate this anticompetitive effect through their executive compensation packages: They can include components in these packages that are positively linked to industry or competitors' profitability. Recent cases of passive investment in a competitor have gone unchallenged by antitrust agencies. Moreover, the Article shows how the leading antitrust cases grant a de facto exemption for passive investment. This stems from their interpretation of the exemption for stock acquisitions that are solely for investment which is part of section 7 of the Clayton Act, the antitrust merger provision. The Article argues that the agencies' treatment of passive investment in a competitor, as well as the leading cases' interpretation of the solely for investment exemption, should be reconsidered.
Implementation of Tourism Satellite Account: Assessing the Contribution of Tourism to the Croatian Economy
Compiling the indicators of tourism consumption and the output of tourism industries, Tourism Satellite Account (TSA) provides a framework for internationally harmonized measurements of direct macroeconomic contribution of tourism. Ivandic and Marusic provide a detailed methodological approach for the transfer of TSA theoretical concepts to the assessment of tourism economic contribution on the case of the Croatia. Giving that the TSA compilation is still characterized by a surprisingly wide range of ‘styles’ used, the chapter contributes to a better understanding of the issues related to measurement of direct tourism impacts. It also gives a set of baseline criteria for resource allocation within tourism policy and the further evaluation of its effectiveness.