9 September 2010
The doctoral thesis of the FCA's Senior Research Officer, D.Sc.(Bus.Adm.), LL.M. Mika Oinonen entitled Does EU Merger Control Discriminate Against Small Markets Companies? Diagnosing the Argument with Conclusions (Tampere 2009) has been published in Kluwer's International Competition Law publication series. It is a major achievement, as roughly 4-5 books are published in the series each year. It is also the first book written by a Finnish expert to be published in the series.
Subject matter of study
The fairness of EU merger control between companies active on different-sized markets has been frequently challenged in the 2000s, in particular. In the opinion of those presenting critical views, the Commission's manner of assessing mergers places companies from small and large markets in an unequal position. There has been talk of "unfair" competition policy and the subsequent "small market problem".
It was the objective of Oinonen's study to delineate what would be the proper way to talk about the issue in the first place, i.e. the discrimination argument of small markets: which issues are relevant and which are the facts to which attention should be paid in the argumentation.
One justified approach (often applied in the criticism) to examine the discrimination argument is related to the assessment of alleged overestimation of market power in the small markets. If the market power born in the context of a deal is overestimated, interventions may be made into deals where this is not necessary (overreaction, i.e. a so-called false positive situation).
On the other hand, underreaction to market power may be theoretically justified by posing largely the same questions and solutions than in the case of overreaction. The study shows signs of how discrimination may in principle, at least, be implemented by the underestimation of market power in the large markets (false negative). In practice, underreaction would mean that transactions would be approved in merger control which should be prohibited from the point of view of functional competition.
Oinonen's study shows that discussion of the discrimination argument is only rational if the complexity related to the causes of the problem and the viable solutions thereto and to the nature of the whole problem is recognized and taken into account in the assessment. According to the study, the problems are much more in-depth than has been perceived so far. The basic problem underlying the so-called small markets and the possible discrimination thereof seems to e.g. relate to underdeveloped internal markets. The possible small market problem can– and should – be influenced from outside the discipline of competition law.
In addition to the framework of inspection related to the discrimination argument, the author scrutinizes the key conclusions and policy implications of the traditional and later schools of competition theory. In the end, the perspective of the study becomes that of eclectic theory which recognizes the complexity of the real world and enables the combining of several relevant viewpoints into the same analysis.
The eclectic view entered into the Finnish competition policy discussion with the dissertation of adjunct professor Martti Virtanen from within the science of economics (Market Dominance -Related Competition Policy. An Eclectic Theory and Analyses of Policy Evolution, Turku 1998) also active at the FCA. The eclectic approach has since been used e.g. by professor Petri Kuoppamäki in his dissertation from within the science of law (Regulating Market Power in EC and Finnish Competition Law, Helsinki 2003).
Reviews on the book
The publisher finds that the author sets the stage for meaningful discussion on the topic between competition lawyers, academics and policymakers. When the relevant terms of the debate are known, finding the answers and defining the practical solutions becomes easier in the future. According to the publisher, the framework of inspection can be applied world-wide and the book is hence also expected to interest experts from outside the European countries.
In the book review they have written for the newly published annual report of the Finnish Competition Law Association, Oinonen's opponents, adjunct professor Pekka Timonen who is the Director General of the Ownership Steering Department of the Government Office, and adjunct professor Martti Virtanen from the FCA consider the book a major addition to Finnish competition research, and perhaps the first genuinely interdisciplinary monograph study in Finland drawing from both the science of law and economics.
According to Virtanen and Timonen, the research related to the so-called level playing field discussion on the competitive conditions of small member states and home market companies is the first systematic analysis of the topic. It is hence not new but what makes it valuable is the methodological and thorough method of implementation which enables an in-depth understanding of the phenomenon and its fruitful further discussion.
Mika Oinonen, the author of the book, has been employed by the FCA since 1 January 2009. His tasks have included preparation of the agency for the possible introduction of the new merger control test proposed by the Competition Act 2010 working group. Oinonen came to the FCA from the University of Tampere where he acted as an academic assistant in business law. His dissertation within that field was inspected at the University of Tampere on 29 May 2009. His supervisor and custos at the public defence of the doctoral thesis was professor Risto Nuolimaa.