Pharmaceutical firms might reconsider any mergers or acquisitions that were initially ruled out as too challenging

In recent years, some potential mergers and acquisitions have been shot down or simply abandoned on the grounds of competition law. The causes are many; the merger analysis may have suggested trouble on the horizon with the competition authorities, or a long and demanding pre-notification process was unacceptable to the parties, or the remedies sought by competition authorities were too onerous. 

However, such initial negative experiences should not stop parties from trying again. When the circumstances are right, antitrust authorities can be willing to reconsider previous conclusions, so companies, including in the pharma sector, might consider rerunning their analyses on transactions they previously ruled out due to competition risks. 

Flying high 

On rare occasions, antitrust authorities prohibit a transaction between two companies, as seen in the aviation industry in January 2011 when the European Commission blocked a merger between Greece's two biggest airlines, Aegean Airlines and Olympic Air. It concluded that the merger "would have resulted in a quasi-monopoly on the Greek air transport market". 

Yet, fast-forward to October 2013, when the Commission unconditionally allowed Olympic to become part of Aegean, concluding that the "merger caused no harm to competition". In less than two years, the Greek aviation market – and the two companies – had changed to such an extent that the Commission saw the transaction in a different light. 

This first-of-its-kind case illustrates how a deal considered incompatible with the Merger Regulation can become possible in the not-so-distant future. 

Back in 2011, the Commission predicted Greek GDP to "become positive again in 2012" and domestic flights in Greece would grow by 2.3 percent. In reality, output fell by 7.3 percent, then continued to fall in 2013, which saw domestic traffic to and from Athens fall by 4.6 percent in 2013 and total traffic at Athens International decline by 3.2 percent. 

As a consequence, the two airlines' turnovers dropped considerably and, by 2013, the failure of Olympic was unavoidable, leading the Commission with no option but to consider the so-called 'failing firm defence' analysis, and approve the transaction. 

The second attempt at a merger between Aegean and Olympic signals that, if the conditions are right, the authorities can change their position when assessing the impact of a transaction – in any industry. Circumstances that might prompt a rethink by a competition authority include a significant decrease in the parties' market shares (maybe due to a new entrant or a decreased ability to compete), seriously reduced financial health, the removal of significant barriers to entry (such as regulatory procedures), or significant changes in the number of customers. Where several circumstances combine, the case would be even more compelling.

Assimakis Komninos is a partner and Jan Jeram is an associate at international law firm, White & Case. They can be contacted at and