The Significance of the New SIEC Test in Merger Control

In 2004, the European Commission had adopted the new EC Merger regulation introducing a new substantive test for merger control. The test is called the significant impediment of effective competition, that is, the SIEC test. The test represents a simple but rather creative European-style solution. It redefined the wording of the old dominance test, thus, achieving two aims: upholding the established good practice and case law of the European Commission and EU courts regarding the dominance test, whilst explicitly instructing and enabling the European Commission to take a more effects-based approach when assessing mergers.

Following suit, in 2005, the Serbian Parliament had adopted the new Law on Competition Protection, which was subsequently amended in 2009. Both the original Serbian Law and its amendment are a transcription of EC antitrust rules, including the new SIEC test.

The significance of the substantive test is in its role in merger control. Namely, the scope and depth of the substantive analysis of a proposed merger before a competition authority mainly depends on the definition and standards envisaged by a certain test.

The reasons for reform of the old dominance test were numerous and highly debated. In general, the said reasons may be divided into two large groups. The first group consists of reasons which are predominantly legal in nature, i.e. based on argumentation and remarks coming from competition lawyers, practitioners and public enforcers. On the other hand, in the other group are mainly economic reasons, addressing the economic drawbacks of the dominance test and the structural method of economic analysis inherent to the test.

Regarding the impact of the new SIEC test in merger control in the EU, in practice, it is very difficult to determine the number of such cases at this still early stage, although some may be already identified. However, it seems that the key significance of the introduction of the new test is still not that much in enforcement, as it is in the fact that it represents an explicit declaration of the intent to adopt most of the argumentation for reform of the substantive test, and a clear indication of future course of merger control on a European level.

In respect of Serbia, although the new SIEC test has been introduced in only but a short period following the European Commission, the impact of the test is rather small. Namely, in Serbia, the Competition Commission, in practice, still mostly applies the dominance test.

The present situation puts European-wide mergers caught by Serbian merger control provisions under the danger of being differently treated in Serbia in comparison to the EU. Therefore, it remains to be seen how and in what pace the Serbian Competition Commission will come in line whit the new approach set out by the SIEC test and diminish the aforementioned risks.

Keywords: competition, dominance, Europe, merger control, reform, Serbia, SIEC test, SLC test, substantive test

Working Paper Series

Getzich (Gecić), B. 2010, The Significance of the New SIEC Test in Merger Control .

The Significance of the New SIEC Test in Merger Control_Serbian.pdf