Merger Performance and Efficiencies in Horizontal Merger Policy in the US and the EU
AbstractIn current horizontal merger policy in the US and the EU an explicit efficiency defense is allowed. On both sides of the Atlantic mergers are unconditionally approved if internal efficiencies are sufficient to reverse the mergers’ potential to harm consumers in the relevant market. Current merger policy is implicitly based on the assumption that rational managers will only propose privately profitable mergers. In this thesis I will show that the empirical evidence on merger performance suggests that this assumption can’t be sustained. Managers do propose uneconomic mergers, motivated by non-wealth maximizing behavior. To tackle this problem I argue that efficiencies should not only be used as an efficiency defense, but efficiencies should work both ways. To avoid type I and type II errors the competition authorities in the US and the EU should undertake a sequential efficiency test in their assessment of specific mergers.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18064.
Date of creation: 01 Jul 2009
Date of revision:
Merger; competition policy; efficiencies; efficiency defence; merger performance; rational manager;
Find related papers by JEL classification:
- K0 - Law and Economics - - General
- K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
- L4 - Industrial Organization - - Antitrust Issues and Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-31 (All new papers)
- NEP-BEC-2009-10-31 (Business Economics)
- NEP-COM-2009-10-31 (Industrial Competition)
- NEP-EFF-2009-10-31 (Efficiency & Productivity)
- NEP-IND-2009-10-31 (Industrial Organization)
- NEP-LAW-2009-10-31 (Law & Economics)
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