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Remedy for Now but Prohibit for Tomorrow: The Deterrence Effects of Merger Policy Tools

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  • Barros, Pedro Pita
  • Clougherty, Joseph A
  • Seldeslachts, Jo

Abstract

Antitrust policy involves not just the regulation of anti-competitive behavior, but also an important deterrence effect. Neither scholars nor policymakers have fully researched the deterrence effects of merger policy tools, as they have been unable to empirically measure these effects. We consider the ability of different antitrust actions – Prohibitions, Remedies, and Monitorings – to deter firms from engaging in mergers. We employ cross-jurisdiction/pan-time data on merger policy to empirically estimate the impact of antitrust actions on future merger frequencies. We find merger prohibitions to lead to decreased merger notifications in subsequent periods, and remedies to weakly increase future merger notifications: in other words, prohibitions involve a deterrence effect but remedies do not.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6437.

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Date of creation: Aug 2007
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Handle: RePEc:cpr:ceprdp:6437

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Keywords: antitrust; deterrence; merger policy; remedies;

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References

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  1. Tomaso Duso & Damien J. Neven & Lars-Hendrik Röller, 2002. "The Political Economy of European Merger Control: Evidence using Stock Market Data," CIG Working Papers FS IV 02-34, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  2. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2006. "How Effective is European Merger Control?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 153, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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Citations

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Cited by:
  1. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2006. "How Effective is European Merger Control?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 153, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. Andreea Cosnita & Jean-Philippe Tropeano, 2006. "On the Effective Design of the Efficiency Defence," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00113503, HAL.
  3. Oliver Budzinski, 2010. "An Institutional Analysis of the Enforcement Problems in Merger Control," Working Papers 101/10, University of Southern Denmark, Department of Environmental and Business Economics.
  4. Jan Loecker & Jozef Konings & Patrick Cayseele, 2008. "Merger Review: How Much of Industry is Affected in an International Perspective?," Journal of Industry, Competition and Trade, Springer, vol. 8(1), pages 1-19, March.
  5. Barros, Pedro Luis Pita & Clougherty, Joseph A. & Seldeslachts, Jo, 2009. "How to Measure the Deterrence Effects of Merger Policy: Frequency or Composition?," CEPR Discussion Papers 7454, C.E.P.R. Discussion Papers.
  6. Oliver Budzinski, 2009. "Modern Industrial Economics and Competition Policy: Open Problems and Possible Limits," Working Papers 93/09, University of Southern Denmark, Department of Environmental and Business Economics.
  7. Cosnita-Langlais, Andreea & Tropeano, Jean-Philippe, 2012. "Do remedies affect the efficiency defense? An optimal merger-control analysis," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 58-66.
  8. repec:hal:journl:halshs-00113503 is not listed on IDEAS
  9. Fumagalli, Eileen & Nilssen, Tore, 2008. "Waiting to Merge," Memorandum 13/2008, Oslo University, Department of Economics.

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