Big mergers must be dropped

A lot has gone wrong in the Greek economy in the last year - including in the air. Earlier this year, the EU Commission blocked the proposed merger between Olympic Air and Aegean Airlines. The reason given was that the merger might lead to the creation of a 'quasi-monopoly'. This will be one of the topics for discussion at the Annual Conference of the Association of Competition Economics (ACE) on 17 and 18 November.

10.11.2011 - Sigrid Folkestad

One of this year's newly appointed honorary doctors at NHH, Professor Patrick Rey of the Toulouse School of Economics, is back at NHH. This time, he will be moderating the debate on the Greek airline merger plan.

More expensive for travellers

The researchers will discuss the EU's rejection of the merger and its claim that a merger would lead to more expensive fares for very many of the six million passengers who fly to and from Athens every year.

The airline merger is just one of many topics that will be discussed next week when NHH hosts the ACE conference.

ACE has held an annual conference every year since the 2003 conference in Madrid, and it is the association's main arena and most important event. It brings together researchers, competition authorities and members of the business community from all over Europe.

Director General of the Norwegian Competition Authority Christine B Meyer will open the conference, after which Kai-Uwe Kühn, Chief Competition Economist in the European Commission, will give the main lecture entitled 'Reflections in Economics in Competition Policy'.

Kühn, who has a doctorate from Oxford University, was appointed Chief Competition Economist last year.

Gasoline is another topic that will be discussed at the ACE conference. Together with researchers, Hans W Friederiszick from Germany will discuss gasoline prices - market power, pricing and consequences. Friederiszick is Managing Director of the German consultancy company e.ca economics.

Ten billion dollar merger?

On the first day of the conference, researchers and chief economists will discuss the bus market, with particular focus on England and France. In Norway, the bus market has become a hot topic after the EFTA Court requested this autumn that the case against the City of Oslo be reopened. The controversy concerns the city's transfers of millions of kroner to the company formerly known as Oslo Sporveier. EFTA believes that this is in violation of the EEA agreement and the principle of equal treatment of private and public bus companies.

Another interesting topic for competition economists and practitioners is the discussion about the mining giants Rio and BHP, the world's second and third biggest extractors of iron ore. For many years, these companies have discussed the possibility of a merger, but the talks came to an abrupt halt after the financial crisis in 2008. They still believe that a joint venture would reduce the company's expenses by around USD 10 billion. But the merger plans have met with resistance. Over the last few years, the authorities in a number of countries have studied the plans and concerns are growing. This is one of Friday's lectures, which is entitled 'Rio/BHP - aborted 101 merger'.

One recent example of a merger being blocked is the merger between the Norwegian bookshop chains Norli and Libris. Earlier this year, the Norwegian Competition Authority stated that a merger would reduce competition in a number of local markets in Norway and limit readers' options. There were therefore grounds for prohibiting the takeover, according to the competition authority. Norwegian mergers will be discussed on Friday, and NHH Professor Lars Sørgard will talk about merger control - local versus national markets.