Competition Commission of India Doi: 10.54425/ccijoclp.v2.

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Journal on Competition Law and Policy Vol. 2, December 2021, pp. 1-44

Behavioural Remedies in
Oligopolistic Markets under the
Indian Merger Control Regime
Pemala Lama1 and Priya Bansal2

Abstract
Competition authorities primarily make use of two types of remedies,
namely, “structural” and “behavioural,” or a combination of the two1,
before clearing mergers that are likely to cause substantial harm to
competition. Of these, structural remedies have been the predominant
choice. However, of late, in the wake of the digital revolution and greater
emphasis on designing remedies on a case-by-case basis, behavioural
remedies have witnessed increased use. To this end, this paper seeks
to address the role of behavioural solutions in the oligopolistic market
structure under Indian competition law, with a focus on the merger control
regime. It also intends to understand and critically analyse the literature
on the problem of oligopolistic markets and the approach adopted with
respect to remedies employed by the competition authorities of various
jurisdictions (including the European Union (EU), the United States of
America (USA), Canada, South Korea, Brazil, and India) to address the
problem. Furthermore, the paper aims to examine the scope and limitations
of behavioural remedies and their potential role in the conditional
clearance of mergers. We use the number and nature of merger control
investigations in the aforementioned jurisdictions in which behavioural
remedies were adopted during 2015–19 to examine the conditions under
which these remedies were used. The findings indicate that there is no

1Deputy
Director, Economics Division, Competition Commission of India;
[email protected]
2Research Associate, Economics Division, Competition Commission of India;

[email protected]
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straitjacket rule in the design and implementation of remedies employed

while assessing the potential competition harm of mergers. The incidence
of the implementation of behavioural remedies varies according to, inter
alia, the nature of the concerned industry, the nature of competition harm
(unilateral/coordinated, vertical/horizontal concerns), and the specific
facts of the case.

Keywords: behavioural remedies, oligopolistic market, merger control

1. Introduction
The merger control regime in India became operative on 1st June 2011 along
with notifications of Sections 5 and 6 of the Competition Act, 2002. There
have been over 750 filings, and CCI is yet to block a single combination.
A proposed combination is approved by the CCI if, prima facie, it is of the
view that the transaction does not or is not likely to cause an appreciable
adverse effect on competition (AAEC). This may be referred to as the Phase
I investigation, whereby CCI approves notifications within 30 working
days. However, if CCI’s assessment shows the likelihood of AAEC in
the concerned market at the prima facie stage, a Phase II investigation is
carried out.
From 2014 to April 2021, in approximately 22 cases, CCI made use of
remedies to grant clearance in Phase I or, after investigation, Phase II.
CCI may employ structural, behavioural, or hybrid remedies as per its
discretion. Structural remedies are usually preferred in horizontal mergers
and involve the sale of one or more businesses, physical assets, or other
rights to address competitive harm in order to maintain or restore the
competitive structure of the market (International Competition Network,
2016). Such remedies aim to strengthen an existing player and/or create
a new competitor so as to provide independent firms with incentives to
maximise profits while preserving some of the efficiencies of a proposed
merger. It also involves self-policing and low monitoring costs, is easy to
administer, readily enforceable, and accomplished over a short duration.
On the other hand, behavioural or conduct remedies are usually preferred
in vertical mergers (Wilson, 2020b); these are designed to modify or

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constrain the upcoming conduct of merging firms, typically through

conditions or restrictions on behaviour that prevent the merged entity from
undermining competition (International Competition Network, 2016).
There are hybrid remedies as well that may be effective when a merger
involves multiple markets or products. Competition is best preserved by
structural remedies in some relevant markets and behavioural remedies
in others.
CCI has made use of hybrid remedies in granting conditional clearance
of mergers in a majority of the cases over the last decade. Only one out of
the eight Phase II investigations saw the implementation of behavioural
remedies. This landmark combination took place between Larsen and
Toubro Ltd. (L&T), Schneider Electric India Pvt. Ltd., and MacRitchie
Investments Pte. Ltd. (L&T – Schneider, 2019). In three of the remaining
seven Phase II investigation cases, i.e., Bayer/Monsanto (2018), DUL/
PVR (2016), and Dow/DuPont (2017), CCI employed a mix of structural
and behavioural remedies.
The literature review and analysis presented in the subsequent sections
attempt to shed light on the reasoning behind the increasing adoption of
behavioural remedies in the merger control regime of various developed
and developing jurisdictions, either on a standalone basis or to complement
structural remedies. The data on the number and nature of cases in which
behavioural or quasi-structural remedies have been employed by various
competition jurisdictions has been collated on a best-efforts basis. The
dataset is limited to the short duration of five years (i.e., 2015–19).

2. Literature Review
2.1 The Problem of Oligopoly vis-à-vis Antitrust Concern
In order to understand the implications of competition on economic
performance, one has to return to the economic theory of perfect competition
and compare it with monopolistic and oligopolistic market outcomes.
At the outset, perfect competition entails the sovereignty of consumers
and producers as price-takers who are able to sell only at the market
price. According to neo-classical economic theory, perfect competition

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not only enhances allocative and productive efficiency, which will ipso
facto maximise social welfare, but also maximises consumer welfare and
increases dynamic efficiency by stimulating innovation. This follows from
the assumption that producers are rational and wish to maximise profit,
and thus, will continue to produce and supply as long as it is profitable to
do so and goods and services can be acquired at the lowest cost possible.
On the other hand, a monopolist, being a price-fixer, can influence the
price either by reducing the volume of its production or by increasing
the price. Thus, such a market structure is characterised by allocative
inefficiency, also known as “deadweight loss,” along with productive and
dynamic inefficiency. It is to be noted that the conditions/assumptions of
perfect competition and monopoly in their purest form are extremely rare
and unlikely to be observed in reality. However, there exist intermediate
market structures between the two extreme market structures, such as
oligopoly, wherein some firms sell slightly differentiated products and
hold and value consumer loyalty, thereby lending the firms some degree
of market power.
The problem of oligopolistic markets is considered one of the most
difficult problems for competition authorities, particularly due to “tacit
coordination” (also called “conscious parallelism,” “tacit collusion,” etc.),
where firms are able to take advantage of certain features of the market and
coordinate their behaviour on prices, output, etc., by directly or indirectly
taking into account their competitors’ strategies and likely reactions that
would result in an infringement of antitrust provisions (Amarnath, 2013).
Therefore, with modern markets being characterised by oligopolistic
market structures, increasing market consolidation, and greater
interdependence between industries, and consequently, higher market
power, competition policy emerges as a respite for firms facing resultant
anti-competitive outcomes for the preservation of healthy competition
in the market. However, according to Whish and Bailey (2015), the
competitive process contains an inevitable paradox: one competitor may
win by being the most innovative and most responsive to customers’ wishes
and producing goods and services in the most efficient way possible and

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succeed in seeing off its rivals. It would be strange, and indeed harmful, if
that firm is then condemned for being a monopolist.
Therefore, in oligopolistic markets, firms are in a position to earn
supra-competitive profits by observing each other’s reaction function/
behaviour and strategising their own business actions accordingly, while
simultaneously having a high degree of resultant responsive limitation
such that it will reduce the level/extent of competition in the market.
The empirical evidence to illustrate the relationship between market
structure, the conduct of firms in the market, and the behaviour of firms
is often referred to as the structure–conduct–performance paradigm
(SCP paradigm). Competition law seeks to check the actions of firms that
can harm the structure of the market, conduct that can foreclose access
to market, and mergers and acquisitions that can reduce the number of
firms operating in the market so as to maintain or restore a competitive
market structure that is likely to have a positive impact on the conduct
and performance of firms operating in the market.
Over the years, several studies have been conducted in order to
understand the conditions that trigger tacit collusion. One such study was
undertaken by Mason (1939) that focused on the relationship between
prices and the number of sellers in the market. This led to the emergence
of the Harvard School, which found a link between oligopolistic market
concentration and supra-competitive profits in the SCP paradigm
(Bain, 1968; Kaysen & Turner, 1959), i.e., oligopolies are able to reap
supra-competitive profits due to their unreasonable degree of market
power (the structural view of oligopolies).
According to the Harvard School and structuralists such as Areeda
and Hovenkamp (2017), Turner (1962), and Kaysen (1951), a direct
correlation exists between the structure of the market, the conduct of
firms on the market, and their performance, and that tacit coordination
occurs in a concentrated market structure. This is because market forces
are inadequate to challenge the entrenched power of a dominant firm,
and leading firms in highly concentrated industries employ conscious
parallelism to avoid price competition, thereby earning abnormal profits.
Entry barrier is viewed as a principal reason for poor performance of

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firms in a concentrated industry, and thus, firms in concentrated markets

are more likely to entail anti-competitive conduct. It is for this reason
that Turner advocates for structural remedies such as the breaking up of
oligopolistic industries to address tacit coordination.
This view was opposed by the proponents of the Chicago School, such
as Bork (1978), Easterbrook (1984), and Posner (1979), who opined that
behavioural factors affect tacit coordination. For successful coordination
to be sustainable, there needs to be high entry barriers and, regardless
of market structure, there is an understanding to adhere to a certain
price which is monitored, and cheating is detected and punished to reap
supra-competitive prices. For tacit collusion to be successful, there is a
prerequisite of certain factors (market concentration, barriers to entry,
standard product, inelastic demand, costs similarity, etc.). The Chicago
School shifted its focus to the measure of the standard of efficiency
and consumer welfare instead of just market power pricing effects on
consumers, and believed that markets are likely to be self-correcting
against any competitive imbalances on their own without intervention by
antitrust regulators.
Another completely different approach is adopted by game theorists,
according to which, each player takes into account the best strategy of
its competitor and accordingly undertakes their own best strategy,
ultimately leading to an equilibrium (i.e., all players have adopted their
best strategy). Oligopolists play “repeated games,” wherein they interact
with each other frequently such that different equilibria are achieved,
some of which may be collusive. In the finite “one shot” non-cooperative
game theory, independent firms will have the incentive to compete rather
than collude. However, collusion becomes more likely (Nash equilibrium)
in markets where firms meet for a repeatedly infinite amount of time
(repeated game), since the trade-off from long-term profits realised with
collusion far exceeds the short-term profits achieved with competition
(Bagwell & Wolinsky, 2000), such that any oligopolistic firm that decides
to cheat or deviate faces the risk of retaliation and may thus be driven out
of business.

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Studies on tacit coordination showed that four cumulative conditions

are required for non-cooperative equilibrium of game theory, i.e.,
oligopolistic firms must share a common understanding of the price at
which collusion takes place; recognition of a credible threat of retaliation
against rival cheaters to discourage any deviation from collusion; ability
of oligopolists to detect any competitive deviation; and sustenance of
tacitly collusive prices by discouraging entry (Yao & De Santi, 2004).
While assessing mergers and acquisitions, competition authorities
are concerned not only with possible anti-competitive ex ante effects of
combinations but also with maintaining or restoring competitive market
structures, which can lead to better outcomes for consumers. Therefore,
competitive assessment of mergers would typically entail a theory of
competitive harm that seeks to investigate why markets will be less
competitive post the merger along with the counterfactual (i.e., competitive
situation without the merger), with factual evidence in support of the
theory of competitive harm.
The assessment of competitive effects of mergers can be complicated at
times and is far from simple. Further, devising and implementing effective
remedies is a complex process. In 2005, the European Commission (EC)
published a Merger Remedies Study (DG Comp), in which it reviewed
the effectiveness of 96 remedies accepted in 40 cases during 1996–2000.
The International Competition Network (ICN) also published the Merger
Remedies Guide in 2016 to describe the overarching principles that form the
basis of sound merger remedies and provide guidance by which remedies
may be designed and implemented.
The Organisation for Economic Co-operation and Development
(OECD, 2001) recommendation on structural separation in regulated
industries suggests that countries should “carefully balance the benefits
and costs of structural measures against the benefits and costs of
behavioural measures”. This includes effects on competition, quality
and cost of regulation, corporate incentives to invest, transition costs of
structural modifications, and the economic and public benefits of vertical
integration.

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2.2 Role of Behavioural Remedies in the Merger Control

Regime
The need for a remedy arises when competitive harm is likely to emanate
from the merger; accordingly, the type of the remedy depends on the
nature of competitive harm. The purpose of a remedy is to maintain or
restore competition, and it should be directed at and proportionate to
address competitive harm.
While most competition authorities prefer structural remedies, a few
are relatively open to the use of behavioural remedies. Such preference
is justified by the fact that structural remedies are more likely to restore
rivalry while behavioural remedies may end up creating distortions in
market outcomes.
In contrast to the permanent one-off nature of structural remedies, it is
important to note that behavioural remedies pose certain limitations, i.e.,
they primarily reveal two important weaknesses of the merger control
regime: the risk of over- and under-enforcement. However, despite these
drawbacks, behavioural remedies can play a significant role, especially
when the absence of a suitable buyer makes divestiture impossible. Even
when divestiture is possible, behavioural remedies may be more effective
when the merger comprises vertical elements that may limit access to
infrastructure, eventually resulting in foreclosure.
Ezrachi (2006) discusses two types of errors by competition agencies
while assessing a merger transaction: a Type I error, which occurs when
a beneficial transaction is prohibited, thus depriving the market of
attaining associated efficiencies, and a Type II error, which occurs when a
harmful transaction is not detected and is consequently cleared, resulting
in competitive detriment. The difficulties in designing, monitoring, and
enforcing behavioural remedies may lead to under prescribing them even
when, in theory, they may yield efficiencies.
Different competition jurisdictions have diverse views on the scope
and categorisation of behavioural remedies. The EU Merger Remedies
Notice confers access remedies under “Other Remedies” and refers
to the granting of access to key infrastructure or inputs as a structural

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remedy. At times, access remedies may be similar to a one-off structural

remedy, and at other times, they may require ongoing implementation
and monitoring, thereby resembling a behavioural remedy. Rigaud and
Loertscher (2020) highlight that access remedies do not neatly fall into
the categories of structural or behavioural remedies and that, while they
can achieve a structural effect on the market, such an effect is not always
guaranteed.
Interestingly, a new study conducted by the French Competition
Authority, Autorité de la concurrence, on behavioural remedies in
competition law draws a distinction between behavioural remedies and
structural commitments by placing in the latter category commitments
that are rapidly (instantly) executed and irreversible in nature and
which require monitoring for a short period, generally less than a year.
Conversely, behavioural remedies are intended to temporarily restrict
the competitive behaviour of the parties and are subject to rigorous and
continuous monitoring for a variable duration, generally between 5 to 10
years.
There has been increased willingness to use behavioural remedies in
case of digital/technology combinations by competition authorities across
international jurisdictions due to the inherent nature of entry barriers
created by network effects in digital markets. In this context, it may be
pointed out that the OECD paper on line of business restrictions (LOBRs)
discuss digital platforms that may potentially be included as “natural”
(demand-side) monopolies having sufficient direct or cross-platform
network effects, which can sometimes be sufficiently strong to drive
competition for-the-market rather than competition in-the-market.
Thus, when data is concentrated in the hands of a few large players, it
may provide them with a substantial competitive advantage against new
entrants. While collection and control of data and dominance are not anti-
competitive per se, data sharing as a merger remedy may be necessary
while approving mergers and acquisitions that combine specialised user
data. It is pertinent to mention that compulsory data-sharing obligation
is imposed by competition authorities across jurisdictions as a remedy in
different sectors.

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3. Methods and Results

In our analysis, we have addressed the research question regarding the
conditions under which behavioural remedies have been adopted by the
competition authorities of select jurisdictions. For this purpose, data has
been compiled on the number and nature of cases in which six different
jurisdictions have employed the use of either quasi-structural remedies
or behavioural remedies. The duration of our analysis is 2015–19 for all
six jurisdictions, i.e., EU, USA, Canada, South Korea, Brazil, and India.
The reason for selecting the competition jurisdictions of the EU and the
USA is that the Indian competition regime is, for the most part, based
on the jurisprudence developed in the EU and the USA, even though the
systems differ significantly in terms of the level and quality of enforcement
(Chatterjee & Gautam, 2009–12). The selection of South Korea is premised
on the idea that, the South Korean Competition Authority is regarded as
one of Asia’s toughest regulators (Freshfields Bruckhaus Deringer, 2018)
and insights derived from their enforcement mechanisms may provide a
good standpoint. Brazil has been chosen in light of the country’s model
being similar to that of India’s in terms of the transition from being a
highly controlled economy (following a licensing regime between 1947–
90 and the enactment of the Monopolies and Restrictive Trade Practices
Act, 1969 (MRTP) in India, which may be comparable to the operation of
military regime in Brazil from 1964–85) to a freer and more competitive
one. Canada’s selection stems from the consideration that the country’s
competition regime has been relatively restrictive compared to other
regimes in terms of the kind of remedies employed in its merger control
assessment, and hence, we considered it imperative to understand the
reasoning behind the same. Accordingly, a comparative assessment of the
aforementioned five global jurisdictions vis-à-vis India has been carried
out.
In order to classify the conditions under which behavioural remedies
have been used, we can make use of a functional relationship between a
dependent variable (y) and a list of independent variables (xi), as described
below:

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y = α1x1 + α2x2 + α3x3 + α4x4 +………+ ui(1)

where αi denotes the coefficient of independent variables xi, ui denotes
the error term, and i can take values 1, 2, 3, and so on;
y – Relevance and effectiveness of the remedy;
x1 – Sector in which the merger is taking place (e.g., telecommunications,
healthcare, etc.);
x2 – Type of merger (horizontal/vertical/conglomerate);
x3 – Nature of the competition harm that is identified, i.e., whether
the merger would result in higher barriers to entry or expansion,
higher post-merger prices (resulting from either coordinated or
unilateral effects), lower-quality products, reduced incentives to
innovate or decline in services;
x4 – Time period that the remedy would require to be put in place.
The aforementioned independent variables (x1, x2, x3, and x4) provide
a broad overview of some conditions, based on which a competition
authority typically makes decisions regarding the kind of remedy to
be employed and determine its relevance as well as effectiveness prior
to the consummation of a merger. In our study, we have compiled the
data for variables x1 and x2 for five of the competition jurisdictions
(EU, US, Canada, Brazil, and South Korea).2 In case of India, we have
provided a broad overview of some of the most significant mergers
that employed behavioural remedies. While we have not compiled a
detailed data for variables x3 and x4, we have provided a brief overview
of the conditions under which some of the cases entailed the use of
behavioural remedies.
 Europe
Table 1 shows, that behavioural remedies have been used by the EC in
14 mergers, while the corresponding figure for quasi-structural remedies
is 9 during 2015–19.

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Table 1. Classification of Sector and Type of Merger—EU (2015–19)

Cases entailing q
­ uasi-
Type of
Year structural remedy Sector
merger
(Total number: 9)
Orange/Jazztel Telecommunications Horizontal
2015 Transport &
IAG/Aer Lingus Vertical
Infrastructure
Worldline/Equens/
Financial services Conglomerate
PaySquare
Horizontal/
Hutchison/Vimpelcom Telecommunications
Vertical
2016
Liberty Global/BASE Horizontal/
Telecommunications
Belgium Vertical
Energy and Natural Horizontal/
SFR/Dansk Fuels
Resources Vertical
Horizontal/
Liberty Global/Ziggo Telecommunications
Vertical
Energizer/Spectrum
2018 Electronics Horizontal
Brands
Horizontal/
Hutchison/Wind Tre Telecommunications
Vertical
Cases entailing
Type of
Year behavioural remedy Sector
merger
(Total number: 14)
PRSfM/STIM/GEMA Media/Entertainment Horizontal
Transport & Horizontal/
SNCF/Eurostar
2015 Infrastructure Vertical
Liberty Global/De
Media/Entertainment Vertical
Vijver Media
Dentsply/Sirona Healthcare Conglomerate
Microsoft/LinkedIn Digital/Technology Conglomerate
2016
Vertical/
ASL/Arianespace Aerospace & Defence
Conglomerate

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Vertical/
Broadcom/Brocade Digital/Technology
2017 Conglomerate
Rolls Royce/ITP Aerospace & Defence Vertical
Transport & Horizontal/
Daimler/ BMW
Infrastructure Vertical
2018 Discovery/Scripps Media/Entertainment Horizontal
Vertical/
Qualcomm/NXP Digital/Technology
Conglomerate
Varta AG/Energizer Electronics Vertical
Telia/ Bonnier Vertical/
Media/Entertainment
2019 Broadcasting Conglomerate
Vodafone/Liberty
Telecommunications Horizontal
Global
Source: Press Corner, European Commission.
Accessed at https://ec.europa.eu/commission/presscorner/home/en

Amongst the 14 merger cases that entailed the use of behavioural

remedies, half (7 out of 14) belong to two sectors—Media/Entertainment
and Digital/Technology. In more than half of the mergers (9 out of 14)
that entailed the use of behavioural remedies, the nature of the merger/
competition concern was either vertical or conglomerate. This highlights
the willingness of the EC to employ behavioural remedies in cases with
non-horizontal concerns.
In two of the mergers pertaining to Media/Entertainment, Liberty
Global/De Vijver Media (2015) and Telia/Bonnier Broadcasting (2019),
higher entry barrier and expansion post the merger was identified as
the key competition harm. The transactions relate to different levels of
the television (TV) or audio-visual (AV) value chain, i.e., the (upstream)
markets for the production and the licensing of TV (or AV) content, the
(intermediate) market for the wholesale supply of TV (or AV) channels,
and the (downstream) market for the retail supply of TV (or AV) services.
In Liberty Global/De Vjiver Media, Liberty Global (“Acquirer”) provides
TV, broadband internet, and voice telephony services via its cable networks
in 12 countries across Europe as well as in certain countries outside Europe.

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In Belgium, Liberty Global is the controlling shareholder of Telenet, a

cable network owner and operator. De Vijver Media (“Target”) primarily
broadcasts the Dutch language TV channels Vier and Vijf through its
subsidiary, SBS Belgium. The EC’s competition assessment brought out
two theories of harm: (a) partial/total input foreclosure and (b) partial
customer foreclosure. The transaction gave Liberty Global joint control
over De Vijver and therefore, over its two TV channels Vier and Vijf. It was
found that Telenet held a dominant position in the market for the retail
provision of TV services. Vier and Vijf were found to be important inputs
for TV distributors, and Telenet’s joint control over these inputs was likely
to give it the ability and incentive to foreclose its rivals from accessing
these channels post-merger. The Commission also assessed whether the
transaction would give Telenet the incentive to remove the channels of
Medialaan and VRT (i.e., two Flemish broadcasters that compete directly
with De Vijver) from its cable platform. It was established that partial
customer foreclosure was likely to occur as a result of Telenet placing
the channels and programmes of Media and VRT at a disadvantage
by, for instance, displaying their video-on-demand (VOD) content less
prominently than that of De Vijver.
In Telia/Bonnier Broadcasting, Telia (“Acquirer”) is a Swedish
telecommunication operator, while Bonnier Broadcasting (“Target”) is
a Swedish media company engaged primarily in the TV broadcasting
business. The EC’s competition assessment brought out the following
theories of harm: (a) partial/total input foreclosure concerns in relation
to free-to-air (FTA), basic pay TV, and premium pay TV sports channels;
(b) conglomerate competition concerns in relation to Telia’s activities as
a provider of telecommunication services and Bonnier’s activities in the
retail supply of AV services, in particular over-the-top (OTT) services, due
to potential foreclosure or providers of retail mobile, fixed internet access
and multiple play services through tying or mixed bundling practices; and
(c) input foreclosure concerns in relation to the sale of advertising space.
The EC’s concerns related to Telia’s competitors in TV distribution being
shut out of the market by not having access to certain channels of the
merged entity, Telia’s competitors in telecom services being shut out of
the market by preventing access to the merged entity’s streaming services,

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and Telia’s competitors in telecom and TV distribution shut out from the
market by preventing their access to the advertising space on the merged
entity’s TV channels. In both transactions, one of the primary remedies
that was proposed was an access remedy entailing licensing requirements
in relation to TV/AV channels on fair, reasonable, and non-discriminatory
(FRAND) terms.
In the three mergers pertaining to the digital space, the likelihood of
data interoperability being compromised post the merger (that locks in
customers to one platform over its rivals, thus creating entry barriers)
emerged as the key competition harm.
In Qualcomm/NXP (2018), apart from interoperability, there were
concerns in relation to the incentive of the merged entity to make it difficult
for other suppliers to access NXP’s technology, along with the merger
giving way to combine the two entities’ significant intellectual property
portfolios relating to NFC (near field communication) technology.
Resultantly, Qualcomm committed to offer licences to NXP’s technology
and trademarks and follow standards of interoperability, both for a period
of eight years, and a commitment not to acquire NXP’s standard essential
patents.
In Broadcom/Brocade (2017), the EC had concerns regarding the
complementarity of the products supplied by the merging entities and
the sharing of confidential information. The concerns were addressed via
interoperability requirements and a commitment to protect third-party
confidential information.
In Microsoft/LinkedIn (2016), the EC had concerns that Microsoft would
pre-install LinkedIn on all Windows PCs and that Microsoft would
integrate LinkedIn into Microsoft Office and combine the user database
of the two entities. In order to address these concerns, Microsoft agreed
to abide by a set of commitments for five years. Two commitments were
in relation to interoperability and provision of access. Additionally, it
was left to the discretion of PC manufacturers/distributors to install/not
install LinkedIn on Windows. Users were also given the leeway to remove
LinkedIn from Windows if PC manufacturers/distributors decided to
pre-install it.

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While the EC has become more receptive to the use of behavioural

remedies in the last few years, commitments to behave in a certain
predefined manner are not deemed adequate by the EC. Moreover, the
EC places great emphasis on the proportionality of the remedy to the
identified harm, such that the effect of the remedy being used is the same
irrespective of the nature of the remedy, i.e., structural or behavioural.
Further, the EC stands out in terms of specifically deeming behavioural
remedies as being relevant for use in “digital” markets.
 USA
Table 2 shows that behavioural remedies have been used by the USFTC
in four of the mergers, while the corresponding figure for quasi-structural
remedies is two during 2015–19.

Table 2. Classification of Sector and Type of Merger—USFTC (2015–19)

Cases entailing
Type of
Year quasistructural remedy Sector
merger
(Total number: 2)
US Renal Care, Inc./DSI
2015 Healthcare Horizontal
Renal
2017 Red Venture/Bankrate Digital/Technology Horizontal
Cases entailing
Type of
Year behavioural remedy Sector
merger
(Total number: 4)
Enbridge Inc./Spectra Energy and Natural Horizontal/
2017
Energy Corp Resources Vertical
2018 Northrop/Orbital ATK Aerospace & Defence Vertical
NEXUS Gas
Energy and Natural Horizontal/
Transmission/
Resources Vertical
2019 Generation Pipeline
Industrial &
Staples/Essendant Vertical
Manufacturing
Source: Press Releases, Federal Trade Commission.
Accessed at https://www.ftc.gov/newsevents/press-releases.

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In two of the mergers that entailed the use of behavioural remedies, the
competition concern was purely vertical. In Northrop/Orbital ATK (2018),
Northrop (“Acquirer”) is one of the four companies capable of supplying
the US government with missile systems, while Orbital ATK (“Target”)
is the premier supplier of solid rocket motors (SRMs)—an essential input
for missile systems for propelling missiles to their intended targets. The
competition assessment established the following theories of harm: (a)
incentive and ability on the part of Northrop to harm competition for
missile contracts by either withholding access to its SRMs or increasing
SRM prices to competitors which, in turn, could force competitors to
raise their respective prices, invest less aggressively to win missile
programs (thus hampering innovation), or decide not to compete at all
(creating barriers to entry and expansion); and (b) the proposed merger
would give Northrop access to the proprietary information that missile
contract competitors share with their SRM vendor while also creating a
risk that the proprietary information of a rival SRM supplier supporting
Northrop’s missile system business could be shared with Northrop’s
vertically integrated SRM business. One of the key highlights that
emerged from the merger assessment is that missile systems and SRMs
are high-technology, defence-specific products that required specialised
facilities to be manufactured, and thus, new competitors were unlikely to
enter the market anytime soon.
In Staples/Essendant (2019), Staples (“Acquirer”) is the largest vertically
integrated reseller of office products and one of the only two retail office
supply superstores in the US, while Essendant (“Target”) is one of the
two wholesale distributors of office supplies. The theory of harm that
emerged from the merger related to the likelihood of Staples gaining
access to commercially sensitive business information on Essendant’s
reseller customers and the resellers’ end customers, which could allow
Staples to charge higher prices when bidding against a reseller for an end
customer’s business.
In Enbridge Inc./Spectra Energy Corp (2017), Enbridge (“Acquirer”) and
Spectra Energy (“Target”) are natural gas transmission companies. The
theory of harm related to a reduction in natural gas pipeline competition

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in three offshore natural gas producing areas in the Gulf of Mexico that
could lead to higher prices for natural gas pipeline transportation from
those areas and increase the likelihood of tacit or explicit coordination
between two pipelines. The reason for the same could be attributed to
the merger giving Enbridge an ownership interest in both pipelines, thus
providing access to sensitive information as well as significant voting
rights over one of the pipelines.
In NEXUS Gas Transmission/Generation Pipeline (2019), Nexus Gas
Transmission (“Acquirer”) and Generation Pipeline (“Target”) operate in
the market for pipeline transportation of natural gas. It was found that
Nexus’s purchase of Generation from North Coast Gas Transmission LLC
and several other owners is anti-competitive due to a non-compete clause
that keeps North Coast from competing to provide natural gas pipeline
transportation in parts of the Ohio counties of Lucas, Ottawa, and Wood
for three years after the acquisition closes.
In three out of the four merger settlements (entailing use of
only behavioural remedies) during 2015–19, the FTC mandated the
establishment of internal firewalls to prevent the leak of confidential
information (which could trigger price rise, hampering of innovation and
erection of entry barriers).
In Northrop/Orbital ATK, the FTC also implemented a supply
obligation towards competitors that entailed non-discriminatory pricing,
scheduling, quality, etc. The merger between NEXUS Gas Transmission
and Generation Pipeline stands out, given that the order of the USFTC
particularly required the parties to execute a revised sale agreement
eliminating the non-compete clauses therein. Thus, the US has provided
conditional clearance to mergers with behavioural remedies even in cases
exhibiting purely vertical relations.
 Canada
Table 3 shows that behavioural remedies have been used in a single
merger investigation in Canada, while the corresponding figure for quasi-
structural remedies is six during 2015–19.

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 lassification of Sector and Type of Merger — Competition

Table 3. C
Bureau Canada (2015–19)
Cases entailing
quasi-structural Type of
Year Sector
remedy (Total merger
number: 6)
Energy & Natural Horizontal/
2016 Parkland/Pioneer
Resources Vertical
Energy & Natural
2016 Harnois/ DPT Vertical
Resources
McKesson/Katz
2016 Healthcare Vertical
Group
Energy & Natural
2017 Superior/Canwest Horizontal
Resources
Horizontal/
2017 Bell/MTS Telecommunications
Vertical
2018 Metro/Jean Coutu Healthcare Horizontal
Cases entailing
Type of
Year behavioural remedy Sector
merger
(Total number: 1)
2015 BCE/Rogers/Glentel Telecommunications Vertical

Source: Position Statements, Competition Bureau Canada.

Accessed at https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/
eng/h_00173.html

According to the Information Bulletin on Merger Remedies in Canada

(2006), “the Bureau will only accept quasistructural remedies, if, once
fully implemented, they adequately eliminate the substantial lessening
or prevention of competition arising from the merger in the relevant
market(s) on a continuing basis without the need for future intervention
or monitoring.” This reflects the Canadian authority’s approach to
make use of behavioural remedies only in selective cases, where future
monitoring is not a prerequisite. The only merger during 2015–19 in which
a standalone behavioural remedy was adopted is BCE/Rogers/Glentel

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(2015). The transaction concerned the market for retail sale of wireless
telecommunications products and services. While the Bureau dismissed
unilateral effects, it identified coordinated effects as a competition
concern owing to the ownership of GLENTEL by BCE and Rogers that
could facilitate access to each other’s sensitive information as well as for
competing wireless carriers for whom GLENTEL provided distribution
services. This could result in consumers paying higher prices for wireless
products and services as BCE and Rogers would likely derive critical
information on competitors’ promotions and subscriber information
through GLENTEL, which could affect all sales channels. To ensure
competition in the market post the merger, the Bureau mandated the use
of administrative firewalls.
In Canada, according to the legal test for a merger remedy (Information
Bulletin on Merger Remedies in Canada, 2006), “the remedy need not
address all competitive harm that may be caused by the transaction
but must reduce it to the point where it is no longer ‘substantial’.” To
understand the approach of the Bureau, the paper has looked at a few
mergers that involved the use of quasi-structural remedies. For instance,
in Superior/Canwest (2017), Superior is Canada’s largest national propane
retailer, while Canwest operates in the retail bulk propane distribution
business in western Canada. It was found that the merger would likely
lessen competition substantially in 22 of the 25 relevant geographic
markets where Superior and Canwest competed with one another locally
in the market for retail sale of bulk propane. The theory of harm related to
post-merger price increases that were likely to occur in the 22 markets and
high barriers to effective entry (in particular, customer switching costs
and existing contracts with incumbent suppliers). The Bureau, however,
concluded that no remedy was required in 10 local markets because the
efficiency gains resulting from the transaction were likely to clearly and
significantly outweigh the likely anti-competitive effects in these markets.
Among the remedies imposed, in addition to the sale of assets in the
remaining 12 markets, the Bureau required that Superior waive contract
terms that impede customer-switching in four markets. These terms

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include any terms providing for automatic renewal, exclusive supply or

minimum volume requirements, equipment removal, etc.
In McKesson/Katz Group (2016), the transaction entailed the
proposed acquisition by McKesson of the healthcare businesses of
Katz Group, which include the Rexall pharmacy retail chain and the
ClaimSecure healthcare claims adjudication business. McKesson is the
largest wholesaler of pharmaceutical products, including prescription
pharmaceuticals, over-the-counter pharmaceuticals, and health & beauty
products, while Katz Group’s Rexall retail pharmacy chain is among the
largest retailers of pharmaceutical products in Canada. It was found that
the merger would likely result in substantial lessening of competition in
26 local markets across Canada. In terms of unilateral effects, it was found
that: (a) McKesson could likely disadvantage Rexall’s retail rivals by
supplying them drugs under less favourable terms or service quality; (b)
Rexall could have an incentive to compete less aggressively on these retail
products as lost customers would likely switch to rival retailers supplied
by McKesson; and (c) wholesale competition from other pharmaceutical
distributors and retail competition from pharmacies supplied by a
wholesaler other than McKesson were unlikely to effectively constrain
McKesson’s ability to act on these incentives. The Bureau also identified
that the proposed transaction could significantly increase the likelihood
of coordination among retail pharmacies owing to the high possibility
of sharing of confidential information among two vertically integrated
players (McKesson and Katz) collaborating as a result of the proposed
merger. To address these issues, the Bureau mandated the establishment
of firewalls along with Rexall retail divestitures.
Except Superior/Canwest and Metro Jean Coutu (2018), in all the other
mergers that entailed the use of quasi-structural remedies, both unilateral
and coordinated effects were identified as competition concerns. Thus,
even in cases where the Bureau was willing to use behavioural remedies,
it was particular to use them only in vertical mergers or joint ventures,
wherein the risk of coordinated effects persists as a result of the flow of
confidential information between the parties (Gudofsky, Salzberger &
McNeece, 2019). Further, unlike EC, the Competition Bureau Canada has

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been receptive to the use of commitments to behave in a certain predefined

manner. For instance, in Parkland/Pioneer (2016) and Harnois/DPT (2016),
both transactions concerned the relevant product market for the retail sale
of gasoline. Significant barriers to entry and expansion were found to exist
in the relevant markets including, but not limited to, market maturity,
high fixed costs, and the need for environmental and regulatory approvals.
Apart from carrying out divestments, the Acquirers in the two transactions
(i.e., Parkland and Harnois) signed a consent agreement preventing them
from increasing any margins earned on the sale of gasoline to their dealers
in specific geographical regions.
 Brazil
Table 4 shows that behavioural remedies have been used in 14
merger investigations in Brazil, while the corresponding figure for
quasi-structural remedies is eight during 2015–19. The principle that the
Brazilian authority adheres to while dealing with remedy negotiations
include proportionality, timeliness, and feasibility.

 lassification of Sector and Type of Merger—CADE, Brazil

Table 4. C
(2015–19)
Cases entailing quasi-
Year structural remedy Sector Type of merger
(Total number: 8)
Horizontal/
GSK/Novartis Healthcare
Vertical
Industrial and Horizontal/
Continental/Veyance
Manufacturing Vertical
2015
GVT/Telefónica/ Horizontal/
Telecommunications
Vivendi Vertical
Horizontal/
Dabi Atlante/Gnatus Healthcare
Vertical
Bayer/Monsanto Agriculture Vertical
Energy & Natural Horizontal/
Praxair/Linde
2018 Resources Vertical
ArcelorMittal/ Industrial and
Horizontal
Votorantim Manufacturing

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Media/
2019 Disney/Fox Horizontal
Entertainment
Cases entailing
Year behavioural remedy Sector Type of merger
(Total number: 14)
Transport & Horizontal/
2015 ALL/Rumo
Infrastructure Vertical
Bradesco/Banco do
Brasil/Itaú Unibanco/ Financial Services Vertical
Santander/CEF
Industrial and
Saint Gobain/SiCBRAS Horizontal
2016 Manufacturing
Itaú Unibanco/ Horizontal/
Financial Services
Mastercard Vertical
Horizontal/
Bradesco/HSBC Financial Services
Vertical
Latam/Iberia/British Transport &
Horizontal
Airways Infrastructure
Itaú Unibanco/Citibank Financial Services Horizontal
2017
BM&F Bovespa/Cetip Financial Services Vertical
Media/
AT&T/Time Warner Vertical
Entertainment
Itaú Unibanco/XP Horizontal/
Financial Services
Investimentos Vertical
Energy & Natural
2018 WEG/TGM Conglomerate
Resources
Energy & Natural Horizontal/
Petrotemex/Petrobras
Resources Vertical
SM Empreendimentos Horizontal/
Healthcare
/AllChemistry Vertical
2019
Horizontal/
NotreDame/Mediplan Healthcare
Vertical

Source: More Press Releases, Administrative Council for Economic Defense

(CADE).
Accessed at http://en.cade.gov.br/more-press-releases.

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Among the 14 merger cases that entailed the use of behavioural

remedies by CADE during 2015–19, nearly half (6 out of 14) belong to
the financial services sector. Eleven of these 14 mergers generate either
vertical/conglomerate concerns or both vertical as well as horizontal
concerns. Moreover, each of the four cases (i.e., Bradesco/Banco do Brasil/Itaú
Unibanco/Santander/CEF, Saint Gobain/SiCBRAS, Itaú Unibanco/ Mastercard,
and Bradesco/HSBC) in which behavioural remedies were used by CADE
in 2016 gave rise to coordinated effects.
In Bradesco/Banco do Brasil/Itaú Unibanco/Santander/CEF, the proposed
merger gave rise to vertical integration between banks and credit bureaus
in the market of solvency and insolvency information on legal and natural
persons, as banks are suppliers as well as consumers of the services
provided by the bureaus. This could result in discrimination in access
to information provided by banks to credit bureaus that will be their
competitors after the joint venture, or discrimination in access to banks
that are competitors to the new bureau’s services. The proposed remedies
required guarantees of non-discrimination for competing credit bureaus
accessing credit information and corporate governance mechanisms to
prevent information exchange between associated banks through the joint
venture.
In Saint Gobain/SiCBRAS, the proposed merger sought to bring together
two competitors in the market for the manufacture of silicon carbide in
Brazil. Resultantly, the merger could give rise to an exchange of sensitive
information between the two parties. Remedies were imposed to prevent
this information exchange.
In Itaú Unibanco/Mastercard, the proposed transaction concerned the
market for payment arrangements in Brazil that has unique characteristics
and a high complexity level. The joint venture was meant to create a new
debit and credit card flag in the Brazilian market. In order to ensure that
the benefits of “e-wallet” and “tap and go” payment mechanisms were
introduced in the market for the benefit of customers, CADE proposed
that the merging parties reduce the duration of the joint venture to seven

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years instead of 20 years so as to enable CADE to monitor activities in

light of the future market structure. Besides, CADE imposed corporate
governance mechanisms to ensure the new company’s (merged entity)
decisions could be equally taken by both parties. Further, it was mandated
that a new brand of payment cards be created which cannot refer to Itaú
Unibanco or Mastercard.
In Bradesco/HSBC, the proposed transaction concerned the banking
sector, which is typically characterised by low competition levels due
to information asymmetry and transaction costs to which the customers
are subjected. It was found that HSBC’s acquisition by Bradesco could
increase market concentration, specifically within markets directed
towards a large number of customers, such as the cash deposit market
and the market for free credit to natural or legal persons. CADE imposed
behavioural remedies in relation to communication and transparency,
credit portability incentives, training, quality indicators, compliance
and restrictions regarding the acquisition of financial institutions for 30
months.
In BM&F Bovespa/Cetip (2017), as per the Administrative Council for
Economic Defense (CADE) the proposed transaction concerned the stock
market and over-the-counter market in Brazil. CADE observed that the
market exhibited elements of natural monopoly which generated entry
barriers, and enabling entry in an industry with natural monopoly leads
to inefficient outcomes. Thus, CADE imposed access remedies that
mandated access to infrastructure to third parties on a nondiscriminatory
basis.
In Itaú Unibanco/Citibank (2017), the competition sensitiveness of the
banking sector was again taken into consideration, as in the case of Bradesco/
HSBC, and a similar set of behavioural measures were implemented.
As seen in the aforementioned cases, CADE’s use of behavioural
remedies seems to be premised, to a large extent, on the unique and
complex nature of the industry (banking sector, payments market, stock
market, etc.) in which the proposed merger is taking place.

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 South Korea
Table 5 shows that behavioural remedies have been used in 10 mergers
in South Korea, while quasi-structural remedies have been used in only
two mergers during 2015–19.
Table 5. C
 lassification of Sector and Type of Merger—Korean Fair
Trade Commission (KFTC) (2015–19)
Cases entailing
quasistructural
Year Sector Type of merger
remedy (Total
number: 2)
Transport & Horizontal/
2017 Maersk/HSDG
Infrastructure Vertical
Vertical/
2018 Qualcomm/NXP Digital/Technology
Conglomerate
Cases entailing
behavioural
Year Sector Type of merger
remedy (Total
number: 10)
SeAH Besteel/Posco Industrial & Horizontal/
Specialty Steel Manufacturing Vertical
Hyundai Steel/
Industrial &
Dongbu Special Vertical
Manufacturing
Steel
2015 Hanwha/Samsung Energy & Natural Horizontal/
General Chemicals Resources Vertical
Lotte Department
Store/Daewoo Horizontal/
Consumer & Retail
Department Store Vertical
Masan
Esmeralda/DS Energy & Natural Horizontal/
2017
Power Co. Resources Vertical
Horizontal/
LG U+/CJ Hello Telecommunications
Vertical

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Dongbang and Transport & Horizontal/

SunKwang Infrastructure Vertical
SK Broadband/t- Horizontal/
Telecommunications
broad Vertical
2019 Global TaxFree and
Financial Services Horizontal
KTis
SKT/Contents
Alliance Platform Telecommunications Vertical
(CAP)

Source: Press Release, Korean Fair Trade Commission (KFTC).

Accessed at https://www.ftc.go.kr/eng/cop/bbs/selectBoardList.do?key=515&bbs
Id=BBSMSTR_000000002402&bbsTyCode=BBST18

Among the 10 merger cases that entailed the use of behavioural

remedies by KFTC, the most notable are the three M&A deals that belong
to the telecommunications sector, which were approved in 2019 alone.
These three hold special relevance, given that they involve the convergence
of telecommunications and broadcasting in Korea. According to Chan-ok
and Eun-joo (2019), in SKT/Contents Alliance Platform (CAP), the proposed
transaction concerned the merger of mobile carrier SK Telecom’s video
streaming app Oksusu, and POOQ, a joint video-on-demand (VOD)
platform jointly owned by three terrestrial broadcasters, i.e., KBS, MBC,
and SBS. It was found that, in the relevant market for video streaming
content suppliers, competing video streaming service providers would
lose access to video streaming content produced by the three terrestrial
broadcasting companies as a result of the vertical merger between the
parties. The remedies imposed were primarily with respect to the supply
of content by the broadcasting channels to other video streaming service
providers for three years.
According to Ga-young (2019), in LG U+/CJ Hello, the proposed
transaction happened between LG U+, a mobile carrier and internet
protocol television (IPTV) service operator, and CJ Hello, the primary
cable TV operator in Korea. It was found that the merger would have

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an anti-competitive effect in the market for 8-level vestigial sideband

service (8VSB), which allows consumers who only signed up for analogue
broadcasting to receive digital content. Resultantly, higher barriers to
entry were likely to prevail because cable TV operators would now also
need IPTV service capability to effectively compete in the market, in
addition to increased probability, post-merger, of the merged companies
increasing subscription rates. As a remedial measure, KFTC mandated LG
U+ to not raise subscription prices for cable TV above Korea’s headline
inflation until 2022 and to not unilaterally reduce the number of cable
channels provided by them or coerce customers to switch to expensive
subscriptions or digital cable TV.
According to Young-sin and Jeehyun (SK Broadband gets conditional
approval to merge with t-broad, 2019), in SK Broadband/T-broad, the
proposed transaction took place between SK Broadband, a fixed broadband
subsidiary of SKT, and T-broad, a cable TV operator. Through the merger,
the combined entity became Korea’s third largest pay TV service provider.
Resultantly, anti-competitive effects were due to occur in the market for
8VSB services and paid digital TV. The remedies were similar to those
imposed in LG U+/CJ Hello.
Among the two mergers that entailed the use of quasi-structural
remedies during 2015–19, Maersk/HSDG (2017) gave rise to both
coordinated and unilateral effects. The behavioural remedies that were
imposed relates to prohibition on sharing confidential information
between the merging parties and with other members of the consortium.
One of the primary behavioural remedies used by the KFTC in most of the
mergers (SeAH Besteel/Posco Specialty Steel (2015), Hanwha/Samsung General
Chemicals (2015), Lotte Department Store/Daewoo Department Store Masan
(2015), Esmeralda/DS Power Co. (2017)) that could potentially give rise to
unilateral effects relates to the imposition of price limits.
 India
In India, behavioural remedies have been used in eight merger
assessments, while quasi-structural ones have been adopted in three
during 2015–19. Figure 1 depicts the percentage of Phase I/II merger
investigations in which CCI used either of the three types of remedies—

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Figure 1. Type of merger remedy used — CCI, India (2015–2019).

Source: Notices Filed/Orders - Combination, Competition Commission of

India (CCI). Accessed at https://www.cci.gov.in/10

structural, behavioural, or quasi-structural. During 2015–19, 70% of the

merger investigations in Phase I witnessed the use of behavioural remedies,
while the corresponding figure for Phase II is a mere 14%. An overview of
three of the most significant (out of a total of 10) merger assessments that
involved the use of either behavioural or quasi-structural remedies in the
Indian jurisdiction is provided.
CCI approved the combination of Bayer/Monsanto with a wide-ranging
package of behavioural remedies to address a variety of competition
concerns about horizontal overlaps, vertical foreclosure, innovation,
and portfolio effects. This case was a fitting example of the fact that the
competition assessment of mergers in innovation sectors is different from
that of traditional merger assessments. This is because innovative markets
compete on characteristics such as quality, innovation, efficacy, and
accuracy, which are considered the non-price effects of a merger; therefore,
it is not feasible to quantify such varied aspects of innovation market that
generally do not compete on price. One important difference in the instant

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merger review is the step that was followed to define the relevant market,
where the overlapping R&D activities of parties, specialised R&D assets
or technical expertise in the overlapping area, and identification of close
substitutes, pipeline products, and portfolios was considered to define the
market.
CCI observed that both parties are vertically integrated agricultural
companies with significant capabilities in the value chain of supply of
agricultural inputs, and since there are substantial entry barriers in the crop
protection segment, the proposed combination would create one of the
largest vertically integrated players in the global agricultural market. CCI
further assessed horizontal and vertical overlaps resulting from the merger
and the resultant possible conglomerate effects due to complementary
product portfolios of the parties. In the non-selective herbicides market
and in the herbicide tolerant traits market, CCI opined that Bayer is
one of the few significant alternatives to Monsanto; thus, the proposed
combination would eliminate an important competitive constraint from
the relevant market. In the market for the licensing of Bt traits for cotton
seeds in India, entry barriers were significant and Monsanto had a strong
market position. Even though Bayer was not present in the Indian market,
CCI held the view that Bayer is one of the few potential competitors with
the capability to effectively constrain Monsanto in the relevant market.
In the market for the licensing of parental lines or hybrids for corn seeds,
the combination would result in the consolidation of two major players in
terms of the strength of seed traits and trait stacks.
In order to address the aforementioned concerns, CCI cleared the
combination with a mix of structural and behavioural remedies which
required Bayer to divest some of its businesses. The behavioural remedies
included a commitment by Bayer that the combined entity would not
offer its clients, farmers, distribution channels, and commercial partners
bundled products that might potentially have the effect of excluding
competitors, and Bayer would follow non-exclusive licensing on a FRAND
term for seven years. Bayer also undertook providing access through
licences on FRAND terms for seven years to existing Indian agro-climatic
data, subscriptions to the combined entity’s digital farming products,

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and platforms commercialised in India, along with access to Indian agro-

climatic data free-of-charge to the government of India institutions in
order to create public good in India.
The above decision is not based on the presumption of innovative
effects, but a meticulous analysis of facts and circumstances of situations
in the Indian scenario, and the instant case sets a precedent for upcoming
mergers for innovative markets in the near future. Further, the remedies
reveal that CCI considered it better to nip the antitrust concerns in the bud
rather than use ex post instruments under the Competition Act, keeping in
view that such ex post instruments may be counterproductive and against
the interest of consumers.
CCI’s recent approval of Schneider/L&T case involving the consolidation
of the top two leading players in the low voltage (LV) switchgear market
in India is significant since it is the first of its kind insofar as it mandates
pure behavioural remedies for a horizontal merger. The notice was filed
by Schneider Electric India Private Limited (SEIPL/Schneider) and
MacRitchie Investments Pte. Ltd. (MacRitchie), wherein Schneider would
acquire the electrical and automation (E&A) business of Larsen & Toubro
Limited (L&T) as a going concern on a slump sale basis. After the said
acquisition, MacRitchie would acquire 35% of the shareholding in SEIPL.
In India, Schneider operates through its subsidiaries and, inter alia,
offers products and services relating to E&A business. MacRitchie
does not have any business operations other than holding investments.
L&T is a technology, engineering, construction, manufacturing, and
financial services conglomerate. The E&A Business of L&T comprises
the manufacture and sale of low- and medium-voltage switchgear
components, custom-built low- and medium-voltage switchboards,
electronic energy meters/protection (relays) systems, and control and
automation products.
Twenty-nine products/solutions were identified as exhibiting
horizontal overlaps, and it was observed that most of the overlapping
products were components of either the main LT Panel/switchboard
(for connecting large industrial or commercial buildings to the medium-

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voltage network), sub-main LT Panel/switchboard (typically used

for floors in buildings), or a final panel board (for end-users with low
energy requirements, such as the occupants of an apartment). Given the
preference and industry practice for the use of same-brand products, CCI
considered it appropriate to assess the proposed combination at the level
of each overlapping product/component and the markets for clustered
products.
An in-depth investigation was undertaken by CCI, and it held the
view that the proposed combination is likely to cause AAEC in six
product markets. It would result in the consolidation of the first and
second leading players in the market with the widest range of offerings
in the market along with the largest distribution channel. It was observed
that the degree of contestability is low and there is no likelihood of an
entry that would be timely and sufficient in scope to act as a competitive
constraint to the merged entity, and the cost to rivals of competing and
increasing their presence in the market would be much higher. The parties
had high combined market shares in six overlapping markets (higher than
40%). These were also the six products which the Acquirers admitted to
being clustered in general. The market investigation suggested that L&T
is the most entrenched brand in India, with the maximum installations, so
the discontinuation of its offering would lead to an increase in the cost of
replacement, as replacement with other brand products is time-consuming
and involves alteration to the existing architecture of the given panel. In
addition, there was a concern that the combined entity would lock a larger
part of the distribution network and other downstream players. Thus, the
combined entity would result in a reduction of competitive/economic
choice to consumers, increased price, and entry barriers.
CCI initially proposed addressing these concerns by divestments of
L&T’s business operations with respect to the six products. However,
the Acquirers argued that such divestments would be unviable and
disproportionate since the plants were multi-product integrated plants,
and carving out specified product business alone may lead to inefficient
outcomes. The combination was approved subject to certain behavioural
modifications aimed at eliminating the likely anti-competitive harm. CCI

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noted that the primary purpose of the remedy is to preserve the present
independent economic options/choices available to consumers which
would be lost because of the proposed combination, and that modifications
should be such that they allow for the establishment of independent
competitors in the relevant market(s) or strengthening existing
competitor(s) for the concerned markets. Accordingly, the combination
was cleared with certain behavioural remedies which, inter alia, included
white-labelling arrangements with third-parties of five products of the
target for a five-year period; provision of a non-exclusive technology
licence for a further five-year period to one of the third-parties that had
availed of the white-labelling; distribution-related remedies to remove de
facto exclusivity (i.e., deletion of termination clause, discontinuation of
loyalty rebates, etc.); and price cap and commitments in relation to R&D,
exports, and non-rationalisation of L&T products.
The instant case highlights the peculiar/distinct facts and circumstances
of the case, i.e., the highly integrated and indivisible nature of the LV
switchgear industry, and a structural remedy would effectively defeat the
objective of the remedy. Therefore, behavioural remedies were adopted to
create viable, credible, and long-term competitors to address competition
harm. Until now, the CCI’s preferred remedy in horizontal mergers
has been the straightforward divestment or a mixed/hybrid remedy.
However, this is a classic case, wherein CCI has not followed a straitjacket
rule and instead relied on a case-by-case analysis of combination after
considering the peculiarities of each case.
An interesting case of merger control in digital markets with network
effects is the OLA/HMC (2019) case, which involved the acquisition of
a minority stake by Hyundai Motor Company (HMC) and Kia Motors
Corporation (KMC) in ANI technologies Pvt. Ltd. (ANI/ OLA) and Ola
Electric Mobility Private Limited (OEMPL). HMC is engaged in the business
of manufacturing and distribution of automobiles, automobile parts, and
accessories, after-sales services, and R&D of automotive engineering
across several countries. KMC is also engaged in the manufacture of
automobiles, their parts, and accessories, as well as after-sales services
across several countries, and belongs to the HMC group. OLA/ANI is

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stated to be a ride-sharing company that facilitates transportation services

through an online platform, ensuring convenient, transparent, and quick
service fulfilment. OEMPL is an affiliate of OLA and is at a nascent stage
of operation in the electric vehicles (EVs) value chain, with its primary
focus on the market of charging infrastructure. In addition, OLA has a
wholly owned subsidiary, viz., OLA Fleet Technologies Private Limited
(OFT), which is engaged in the business of operational car leasing.
The Indian radio taxi market exhibits a duopoly market structure, with
approximately 90% of the market share accounted for by OLA and Uber,
with few fringe players. In the radio taxi market, CCI identified concerns
in relation to vertical linkage among the parties. In the instant case, OLA,
a vertically integrated leader in the radio taxi market venturing into OFT
indirectly created an inherent conflict of interest and potential concern
of “self-preferencing” of HMC or KMC cars on the ANI platform. CCI
observed that a substantial majority of the vehicles leased by OFT are
registered in the marketplace of OLA.
Platforms that are vertically integrated with suppliers riding on
the platform can distort the level playing field for other players, and
preferential treatment to HMC or KMC vehicles may accentuate that
conflict of interest and also distort the level playing field for non-HMC and
non-KMC drivers, resulting in disadvantaged access to OLA’s network
for non-HMC/non-KMC drivers. Voluntary modifications were offered
by the parties to ensure that the ANI platform would act in an objective
manner and not result in discriminations against any driver who does not
drive a vehicle of HMC or KMC make.
In order to address the aforesaid theory of harm and ensure that
preferential treatment/discrimination with respect to the brand of cars
will not be provided to vehicles plying on the ANI platform, CCI approved
the transaction with the following behavioural commitments: (a) the
parties shall cause to procure that the strategic collaborations envisaged
pursuant to the Strategic Co-operation Agreement (which are proposed to
be subsequently agreed between the parties by way of a separate Business
Cooperation Agreement) shall be on a non-exclusive basis; and (b) the
Target shall cause to procure that the algorithm/programme of the Radio

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Taxi Marketplace shall not (i) give preference to the driver based solely
on the brand of passenger vehicle(s) manufactured by the Acquirers or
(ii) discriminate against any driver based solely on the brand of passenger
vehicle(s) manufactured by any other automobile manufacturer (i.e., other
than the Acquirers).

4. Conclusion
Analysis of the data on the type of remedies adopted by six jurisdictions
during 2015–19 shows that the EC and Brazil have made use of “behavioural
remedies” in a significantly higher number of mergers, followed by India
and South Korea, which have shown an increasing inclination towards
such remedies, with a moderate degree of use. USA and Canada, on the
other hand, have been more selective in terms of the remedies they chose
to adopt.
Further, analysis of data on the type of merger/competition concerns
in different jurisdictions highlights that vertical/conglomerate mergers
are more often subjected to behavioural remedies and typically constitute
a longer duration, ranging from 3–8 years and, at times, 20–25 years
depending on the type of behavioural remedy employed. For instance, a
behavioural remedy that constitutes firewalls may be imposed for a fairly
longer duration of 20–25 years (as was done by EC in ASL/Arianespace)
while the imposition of price limits (as in a number of mergers in South
Korea) and access remedies (as in the case of the digital mergers in EC and
number of cases in India) may be imposed for a relatively shorter duration
of 3–8 years.
With regard to the nature of competition harm, the analysis is reflective
of the fact that mergers that give rise to coordinated effects/tacit collusion
may likely lead to sharing of sensitive information between parties to the
detriment of their competitors either in a vertical supply chain or in a
horizontal merger. This adversely affects prices, creates entry barriers, and
hampers innovation at the same time. Behavioural remedies, particularly
the implementation of firewalls, mechanisms of corporate governance,
and imposition of price limits, may be useful in such a scenario, as is
evident from the analysis.

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The sectoral segregation of mergers shows that the adoption of

behavioural remedies may be steered by the nature of the industry in
which the proposed merger takes place. Brazil is a case in point, where
CADE, in several merger assessments, specifically took into consideration
the competition sensitiveness of the banking sector driven by high entry
barriers and low competition, features of natural monopoly exhibited in
the stock market and the over-the-counter market that makes the entry of
other players result in inefficient outcomes, and the unique and complex
nature of the payments market. The EC, too, acknowledged the importance
of behavioural remedies in digital/technology markets, where the primary
issue does not typically concern the elimination of a rival, and instead,
relates to the provision of access to key inputs/infrastructure. This is
primarily because digital markets are characterised by high entry barriers
due to the existence of network effects. Opaque data practices and data
privacy further reinforce these barriers, thereby reducing alternatives for
consumers to switch to a different platform. Even in the case of India, CCI
made use of behavioural remedies to approve a merger that combined
specialised user data. The merger of Bayer/Monsanto was approved
by CCI under the condition that the combined entity will grant access
of Indian agro-climatic data on fair, reasonable, and non-discriminatory
terms to potential licensees. In Canada, behavioural measures were
imposed in two of the mergers that took place in the energy and natural
resources sector, where the Bureau took into consideration the nature
of the industry, specifically market maturity, high fixed costs, and
environmental and regulatory approvals.
There are no “one-size-fits-all” merger remedies, and the incidence of
usage of behavioural remedies vary, inter alia, according to the nature of
the concerned industry, competition harm, and the specific facts of the
case. Access commitments can serve as important instruments in vertical
mergers that may generate exclusionary effects that restrict competition
across the vertical. Behavioural commitments can serve as an effective tool
if it is not necessary to change the competitive structure of the market to
alleviate competition harm while restoring efficiency gains to be attained
from the transaction.

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Merger proceedings are typically bilateral in nature, wherein

negotiations take place between the merging parties and the Commission.
There may be instances where the parties have an incentive to conceal
or provide information that may be in their favour, thereby limiting
factors for the identification of tacit coordination, especially in horizontal
mergers, thereby risking the occurrence of a Type II error. In order to
address such risk of under-enforcement of the merger control regime,
CCI may undertake in-depth market investigations/market studies to
understand and assess the market structure and the positioning of rival
competing firms therein, including pricing strategies, business models,
cost information, investments, etc. Section 49 of the Competition Act,
2002, empowers CCI to undertake competition advocacy including market
studies, which can further lead to recommendations for governments,
sector regulators, industries, and industry associations. CCI may also
strengthen its international cooperation network in case of global mergers
in the early assessment stage to avoid conflicting remedies and design
common or interconnected remedies, given that the remedies in one
jurisdiction can have an impact on other jurisdictions.
Going forward, one can emphasise the ex post enforcement mechanism
considering the costs and errors resulting from ex ante enforcement against
tacit collusion. Ex post assessment of behavioural merger decisions can
be an important toolkit to assess previous merger review decisions and
improve the quality of future merger decisions. It can also help understand
market conditions post-merger and assess whether the conditions for the
adoption of a certain remedy was correct during the period of review
given the information available during that time, and whether it was in
sync with CCI’s policy goals, all of which could sharpen its merger control
regulation.

Endnotes
1Referred to as “hybrid/quasi-structural” remedies.
2For
our analysis, we have classified access remedies under behavioural
remedies.

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