Merger Assessment in Oligopolistic Markets: Lessons from Interbrew/Bass

This paper considers the means by which mergers are assessed by competition authorities in oligopolistic markets. The focus of the paper is on whether a merger would lead to the emergence of conscious parallel behaviour arising from the joint dominance of the leading players. This assessment is typically conducted informally relying on a checklist of known market conditions that support the formation of cartels. This paper highlights the problems that can arise with this approach and the need for competition authorities to place greater emphasis on empirical assessment of market conduct. By way of illustration, the paper considers market conduct in the UK beer market in light of the conclusion of the UK Competition Commission that co-ordinated behaviour would arise following the Interbrew/Bass merger. The analysis here points to flaws in the Competition Commission’s arguments and consequently challenges its findings.