Firms increase profitability mainly by increasing prices (reducing output) in the market, and thus adopting conducts harming competition. If investors believed that the merger would not be profitable for the merging firms (that is to say, firms are not likely to increase prices/reduce output, and thus are not likely to adopt a conduct having an adverse impact on competition), the merging firms’ share prices are likely to have exhibited negative abnormal returns on the day of announcement. The event study used as a sample the cases decided by the Commission that have been identified as gap cases in Chapter 4. The results indicated that the Commission’s decision coincides with the investors’ perception on the day of the initial significant dissemination of information regarding the adverse effects of three of these mergers on competition, Syngenta CP/Advanta, Johnson & Johnson/Guidant, and T-Mobile/Tele.ring. However, as regards the mergers Airtours/First Choice, Oracle/PeopleSoft, and Sony/BMG, which were assessed by the Commission under the dominance test of the original ECMR, the market perception contradicts the Commission’s decision. The market did not expect the Airtours/First Choice to have an adverse impact on competition, while it regarded both Oracle/PeopleSoft, and Sony/BMG as leading to adverse effects on competition in the post-merger markets. Thus, the conclusions of the event study coincide with the conclusions of the theoretical case law analysis elaborated in Chapter 4. According to these conclusions, Oracle/PeopleSoft and Sony/BMG were gap cases. As mentioned in Chapter 4, a limitation of this book concerns the lack of information. The analysis of some cases in this book was done based on publicly available material. The extent to which the authorities’ decisions, as well as other published material accurately, fully reflect the market conditions may vary on a case-by-case basis. Thus, in analysing these cases, certain assumptions as regards the market structure and market features had to be made. Unfortunately, access to the competition authorities’ file and documents was not possible. Had such access been possible, the accuracy of the results of this chapter might be further enhanced. Provided the authorities are able to provide access to certain information (market conditions, market structures, market shares, etc.) contained in the documents relevant for these mergers, a more accurate analysis can be carried out in the future. In particular, future research can focus on EU member states and Australia. This book referred to likely non-collusive oligopolies identified in Finland and Australia, without providing any further analysis as has been done for the other jurisdictions analysed herein, due to the lack of publicly available decisions. Since Australia presents such an interesting example of a jurisdiction which initially employed the SLC test, then changed to the dominance test and then reverted to the SLC, it would be useful to conduct further research on these likely gap cases. In addition, the event study methodology that was used in this book is generally subject to limitations arising from the assumptions of both the

theoretical and technical model. Notwithstanding strong assumptions such as that all stocks in the sample have the same sensitivity to the market,3 as well as issues such as the existence of “noise” in the data, event studies constitute a useful and tractable indication of the impact of a merger, but cannot solely constitute sufficient evidence of the effects of the merger in the postmerger market. Further analysis may be necessary in order to “insulate” the share price movements from events occurring around the event date, in order to enhance the accuracy and predictability of event study analysis. The substantive test was amended as regards the ECMR. Thus, the gap in the dominance test was rectified as the European Commission is currently able to capture non-collusive oligopolies under the SIEC test. However, several member states still adhere to the traditional dominance test,4 and thus are still likely to experience cases in which the competition authorities will be facing a merger that will have the features of a noncollusive oligopoly but they will be unable to apply the dominance test, and will thus resort to other methods of trying to deal with the adverse effects of such mergers on competition. Such an approach is likely to lead to legal errors, uncertainty and successful appeals against the authorities’ decisions. Evidence of cases illustrating the existence of a gap in the application of the dominance test is a fact that needs to be taken into consideration by these member states in order to enable them to efficiently and accurately assess the adverse impact of mergers on competition. Improved understanding of mergers leading to non-coordinated effects in oligopolistic markets as well as of the contributing factors, firmly rooted in economic theory, is essential in three respects: reducing the number of transactions having an adverse impact on competition that are cleared, reducing the number of beneficial transactions that might be prohibited, as well as reducing the uncertainty surrounding merger approval. The amendment in the substantive test in particular and, in general, the amendments included in the Recast ECMR, is of paramount importance in the accurate assessment of mergers in the EU. Similar amendments need to be followed in the 11 member states and other jurisdictions that still adhere to the dominance test.