Springer-ProSiebenSat.1-Merger
The Prohibition of the Proposed Springer-ProSiebenSat.1-Merger:
How much Economics in German Merger Control?
Oliver Budzinski & Katharina Wacker*
March 2007; forthcoming in: Journal of Competition Law & Economics
Abstract: We review the Bundeskartellamt (Federal Cartel Office Germany) decision on the
proposed merger between Springer and ProSiebenSat.1 from an economic point of view. In
doing so, it is not our goal to analyse whether the controversial decision by the Bundeskar-
tellamt has been correct or flawed from a legal point of view. Instead, we analyse whether the
economic reasoning in the decision document reflects state-of-the-art economic theory on
conglomerate mergers. Regarding such types of mergers, anticompetitive effects either do not
occur regularly or are more often than not overcompensated by efficiency gains, so that a
standard welfare perspective demands reluctance concerning antitrust interventions. This is
particularly true if two-sided markets, like media markets, are involved. However, anticompe-
titive conglomerate mergers are not impossible, in particular in neighbouring markets where
there is some relationship between the products of the merging companies. In line with the
more-economic approach in European merger control, a particular thorough line of argumen-
tation, backed with particularly convincing economic evidence, is necessary to justify a pro-
hibition of a conglomerate merger from an economic point of view. Against this background,
we do not find the reasoning of the Bundeskartellamt entirely convincing and sufficiently
strong to justify a prohibition of the proposed combination from an economic perspective.
The reasons are that (i) the Bundeskartellamt fails to continuously consider consumer and
customer welfare as the relevant standards, (ii) positive efficiency and welfare effects of
cross-media strategies are neglected, (iii) in contrast, the competition agency sometimes ap-
pears to view profitability of post-merger strategy options to be per se anticompetitive (effi-
ciency offence), (iv) the incontestability of the relevant markets is not sufficiently substanti-
ated, (v) inconsistencies occur regarding the symmetry of the TV advertising market duopoly
versus the unique role of the BILD-Zeitung and (vi) the employment of modern economic
instruments appears to be underdeveloped. Thus, we conclude that the Bundeskartellamt has
not embraced the European more-economic approach in the analysed decision. However, one
can discuss whether economic effects are overcompensated in this case by concerns about a
reduction in diversity of opinion and threats to free speech. Similar to the Bundeskartellamt,
we do not consider these concerns in our analysis.
Keywords: merger control, media markets, more-economic approach, conglomerate mergers,
cross-promotion
JEL-Code: L82, L40, K21
Dr. Oliver Budzinski, Visiting Professor, Philipps-University of Marburg, Department of Econom-
ics, email: [email protected]. Katharina Wacker, Economist, Heinrich-Heine-
University of Düsseldorf, Department of Economics, email: [email protected]. We
thank Arndt Christiansen and Franziska Kohl for valuable comments on earlier versions of this pa-
per and Barbara Güldenring for editorial assistance.