The past, present and future of the SIEC standard in EU merger review

A good 17 years have passed since the European legislator recast the Merger Regulation in 2004 to capture any form of “significant impediment to effective competition” (“SIEC”). While the Commission initially applied the SIEC test cautiously, in recent years it has shifted to a significantly more interventionist approach. The Commission determined that ‘close’ competitors does not have to mean ‘closest’ competitors, multiple competitors can be ‘close’ in one and the same product market, and the concept of closeness can apply also to homogenous (rather than only differentiated) product markets. The Commission broadly interpreted the notion of an ‘important competitive force’, moving beyond the elimination of ‘mavericks’, and finding that in an oligopolistic market almost any competitor can be viewed as an ‘important competitive force’. The Commission has also applied the SIEC concept to innovation competition beyond well-defined product markets and explored novel theories of harm such as pivotality and common minority ownership, while narrowing the scope for defenses such as failing firm and efficiencies. The EU General Court’s recent CK Telecoms judgment rolls back the Commission’s increasingly broad interpretation of the SIEC test in a significant way, insisting on a rigorous competitive effects analysis even in highly oligopolistic markets. The future direction of EU merger control is now in the hands of the EU Court of Justice, which is hearing the case on appeal.