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Measuring the Extent of Structural Remedy in Section 7 Settlements: Was the US DOJ Successful in the 1990s?

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  • Mikhail Kouliavtsev

Abstract

This paper suggests an innovative measure of structural relief obtained in a typical Section 7 settlement. The fraction of competitive overlap subject to divestiture as a condition of the settlement is modeled as a function of merger-specific efficiencies, the proportion of the deal held “hostage” to antitrust review, the merger’s anticompetitive potential, and other factors. The model is applied to data on 86 recent Justice Department cases covering the period 1990–2003 and to the subsample of 1990s cases. All data are collected from publicly available documents only. The government is found to secure larger divestitures when the cost to the acquirer of delaying the settlement is high. The resulting estimates are used to predict several out-of-sample observations. Copyright Springer Science+Business Media, LLC 2007

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  • Mikhail Kouliavtsev, 2007. "Measuring the Extent of Structural Remedy in Section 7 Settlements: Was the US DOJ Successful in the 1990s?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(1), pages 1-27, February.
    • Handle: RePEc:kap:revind:v:30:y:2007:i:1:p:1-27
    DOI: 10.1007/s11151-006-9118-4
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    merger policy; U.S. Department of Justice; structural remedies; L44; C24;
    All these keywords.

    JEL classification:

    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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