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A ‘concentration’ is the legal combination of two or more firms by merger or acquisition. Although such operations may have a positive impact on the market, they may also appreciably restrict competition, if they create or strengthen a dominant market player.
In order to preclude restrictions of competition, the European Commission exercises control over planned concentrations with an EU dimension (i.e. when the operation extends beyond the borders of an EU country and exceeds certain worldwide and EU-wide turnover thresholds). It may then authorise them subject to conditions or forbid them.
In determining whether a concentration is compatible with the common market, the Commission takes account on a case-by-case basis of several factors, such as the concepts of ‘EU dimension’, ‘dominant position’, ‘effective competition’ and ‘relevant market’. The basic criterion used to analyse concentrations is that of a ‘dominant position’. One or more firms are said to hold a dominant position if they have the economic power to influence the parameters of competition, especially prices, production, product quality, distribution and innovation, and to limit competition to an appreciable extent.
EU rules for the control of concentrations are found in Regulation (EC) No 139/2004, which entered into force on 1 May 2004.