Policy Formulation, Implementation and Feedback in EU Merger Control

14

put into practice, what motivated them, and which self-interests were served. The 1992
Nestlé/Perrier decision, which represents one of the first major cases examined by the
MTF, is analysed. In an integrated discussion we consider whether or not the MTF
negotiated alongside specific firms, how this ‘community’ can be characterised relative to
that found when the MCR was negotiated, and how its development can be explained.

In February 1992, the multi-national Swiss-based food conglomerate, Nestlé,
notified the Commission of its intention to acquire all of Perrier, a French bottled water-
company. The proposed merger would have left Nestlé with 48% of the French market
for mineral water, with the next largest supplier being BSN with a 20% share. However,
in a bid to squeeze the deal past the MTF, Nestlé agreed to sell Volvic (one of Perrier’s
leading brands) to BSN if the merger was approved. Estimated post-merger market shares
with the Volvic deal would have left Nestlé with 37% and BSN with 31% of the market.
The MTF was concerned that even with the Volvic deal, the merger posed significant
problems for competition in the French market for bottled source water. Although the
sale of Volvic would have eliminated the threat of a Nestlé monopoly, the MTF believed
that Nestlé and BSN would become collectively dominant.

Nestlé/Perrier represented the first major case¹⁹ in which the MTF investigated
the matter not as a single firm dominance case but as a joint or collective dominance
case.²⁰ The MCR neither explicitly allows for, nor rules out the possibility of collusion
as a source of dominant position: it states only that a merger will be prohibited if
effective competition is significantly impeded. However, the wording of the Regulation
itself was restricted by pervious decisions of the ECJ. The definition of a dominant
position in the MCR is consistent with that given by the ECJ for the application of Article
82 during the aforementioned Phillip Morris case. According to the Commission a
dominant position:

is a situation of economic power held by a firm, which allows it
to hinder effective competition in the relevant market. It puts
the firm in a position to exert considerable influence on the
conditions in which competition is to develop and to act without
having to take that into account (Commission 2000).

Because the MCR only allowed the MTF to investigate and prohibit mergers that would
result in the creation or strengthening of a single dominant (monopoly) position,

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