Pivotality: A sound new theory of harm in horizontal mergers?

September 15, 2020

In its review of the Novelist/Aleris merger, the European Commission relied upon a novel pivotality theory of harm, where pivotality indicates that competitors would not have sufficient capacity to supply the entire market demand.

In this article published in the Journal of European Competition Law & Practice, Raphaël De Coninck and Roman Fischer critically assess the Commission’s pivotality theory of harm and explain that it is particularly prone to both type 1 and type 2 errors, and thus does not generally provide a sound basis for assessing unilateral effects in horizontal mergers. The authors argue that pivotality as an indication of market power can only be relevant in very specific circumstances, and that such a theory should not be applied without proper empirical and market-specific validation.