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149

the new entity would be protected by high barriers to entry as no other network would be able to reach a similar size, in particular with the disadvantage of not having access to the same amount of data on users.

291.

For publishers, the ability to manage ads through the direct channel and/or a

variety of ad networks or ad exchanges is a determining factor for the choice of using the ad serving technology (rather than rely on a bundled solution such as AdSense). In particular, the use of a stand-alone (unbundled) ad serving tool enables the publisher to determine the rules and priorities for selecting ads that will offer the highest monetisation of its ad space. This ability to instruct the ad serving tool is a major attraction of the product and is generally associated with participation in a number of ad networks or ad exchanges. A degradation of the conditions of use of DFP with competing networks (that is to say higher prices, lesser quality, "tweaked" ad arbitration or an outright refusal to provide ad serving services on competing networks) would imply a degradation of the product for the users of DFP. The ability to foreclose will therefore depend on how customers respond to such degradation. In response to product degradation, publishers could switch to alternative suppliers of ad serving tools unless switching costs are high or they could move their inventory to AdSense (this is

the effect predicted by strategies will therefore

most hinge

third-party on whether

complainants). The effect of such switching is easy, whether degrading

DFP has an impact for ad serving tools

on

the choice

do

exist.

of

ad

network

and

whether

credible

alternatives

292.

It should be noted that attracting publishers and increasing the sale of

remnant inventory through the AdSense network is one of the objectives of the acquisition of DoubleClick by Google. The fact that Google wishes to increase the size of its ad network and its intermediation revenues by improving the monetization of DoubleClick's customers' remnant inventory might be a concern if rivals were foreclosed to the detriment of consumers. Establishing whether the merged entity's potential post-merger strategies will lead to anti-competitive foreclosure requires a careful consideration of the facts in this case.

293.

For anti-competitive foreclosure to arise, a number of conditions must be

present as some of the strategies that the new entity might put in place can also have pro-competitive effects (such as lower prices for users or improved quality of ad serving on AdSense, provided such quality improvements are not

outweighed by price increases). Horizontal Merger Guidelines149, foreclose; and (iii) the overall assessed.

As indicated in paragraph 94 the (i) ability to foreclose; (ii) the impact on effective competition

of the Non- incentives to need to be

294.

All the theories of harm presented to the Commission rely on a number of

crucial assumptions about the market characteristics. In particular, the existence of high switching costs for ad serving tools, the degree of market power held by the merging parties and the existence of strong network externalities (both direct

Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of

concentrations

between

undertakings,

adopted

on

28

November

2007,

http://ec.europa.eu/comm/competition/mergers/legislation/nonhorizontalguidelines.pdf

76

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