Digging in the Scrap Heap! A new theory of adverse buyer power

The Aurubis / Metallo merger was approved unconditionally by the European Commission after an in-depth investigation, which included the sending of a Statement of Objections to the Parties and an oral hearing. The Commission was concerned that this merger, by combining the two largest purchasers of copper scrap in the EEA, would give rise to significant buyer power. Whilst increased buyer power usually benefits consumers, as lower input costs often translate into reduced product prices, in some cases imposing lower prices on suppliers could result in a significant impediment of effective competition (“SIEC”).

In this Brief, we offer an economic perspective on the Commission’s approach to investigate competition concerns stemming from increased buyer power that results
from horizontal mergers, with particular focus on a new theory of harm.