U.S. and European Merger Policies Move Towards Convergence

Original published in Legal Backgrounder, Washington Legal Foundation, Vol. 17 No. 30,August 9, 2002

The collapse of the proposed merger between General Electric and Honeywell last year prompted plenty of discussion about the differences between the European Union (EU) and the United States systems when it comes to competition analysis. Some of this discourse was perhaps overstated - particularly where it sought to create the impression that European antitrust authorities were intentionally discriminating against American businesses - as well as overly pessimistic. But for the most part it has positively focused attention on the need for greater antitrust convergence.

Notwithstanding the GE/Honeywell deal, there is already an enormous amount of cooperation between American and European competition authorities (A note on terms: in the United States the term "antitrust" is used to refer to all matters relating to monopoly, mergers and restraints of trade, whereas in Europe and elsewhere "competition" is the catch all phrase, while antitrust refers only to restrictive trade agreements.) The U.S. has entered into numerous bilateral cooperation agreements with the EU, and the Organization for Economic Cooperation and Development ("OECD") has been issuing recommendations for antitrust cooperation ever since the 1960s.

But cooperation alone is insufficient, as the GE/Honeywell case makes clear. Officials on both sides of the Atlantic have explained that there was, in fact, extensive cooperation in that case. And this underscores GE/Honeywell's signification. If there was so much cooperation, with both American and European officials "analyzing identical product and geographic markets and having access to the same facts," Assistant Attorney General Charles A. James, Address before the OECD Global Forum on Competition (Oct. 17, 2001) (available at usdoj.gov), how could they come to such contradictory conclusions?

The answer is that although there is much similarity between the merger control regulations in Europe and the United States, important substantive and procedural differences also exist, as well as perhaps some conflicting underlying assumptions. These differences cannot and should not be brushed under the rug.

This Legal Backgrounder will focus primarily on merger control, which is simultaneously the area of antitrust where cooperation is the most developed and the area where convergence is most essential, since "[v]irtually any large transaction involving international business is likely to be subject to review in both the U.S. and under the European Merger Regulation." Assistant Attorney General Charles A. James, Address before the Canadian Bar Association (Sep. 21, 2001) (available at usdoj.gov). It will examine some of the key differences between the two jurisdictions, explore the reasons for some of those differences, and review recent efforts to bridge the gaps. It will also discuss measures being taken on a more global scope which may...