The substantial question raised, with respect to conglomerates, is on the applicability of basic competition laws regulating corporate combinations to them since these mergers lack the horizontal or vertical characteristics of most traditional mergers. The Competition Authorities never paid much attention to conglomerate mergers mainly because competition concerns are far less likely to arise in case of vertical or conglomerate mergers with respect to the merger between competitors. Therefore, when there is no potential appreciable adverse effect on competition arising out of such mergers, the authorities did not feel the need of screening such combinations. While it can be reasonably accepted that conglomerate mergers may not be anti-competitive per se, the conglomerate aspect may constitute an additional factor , either aggravating or mitigating , to existing horizontal or vertical effects. A cautionary approach needs to be taken by the antitrust authorities in the assignment of the possible exclusionary effects of conglomerate mergers on competitive conditions.
However, conglomerate merger, that is merger between economically unrelated firms,1 was realised to be a potential threat to antitrust laws for the first time in the U.S in the 1950, where an amendment was made to Section 7 of the Clayton Act, 1950. It is known to be the most controversial issues in Competition law regime, mainly said so because of the differential assessment of the GE/Honeywell Merger by European Commission and the U.S. Department of Justice. Also the International Competition Network holds conflicting views when it comes to assessment of Conglomerate mergers.2 Generally, a conglomerate will raise concerns when it makes the leverage of market power possible, thus having as its effect or object a foreclosure of the market to effective competitive.
Cite this article:
Swarnim Shrivastava. Assessing Conglomerate Mergers under Competition Law–With Special Focus on Foreign Jusdictional Practices. Research J. Humanities and Social Sciences 2014; 5(4) 361-365