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Competitive Effects of Merger Remedies in Europe’s High-Tech Industry

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  • P.A. Angelov
  • S. Rosenkranz
  • E.J.J. Schenk

Abstract

Using an event study methodology, this paper assesses the competitive effects of remedies implemented by the European Commission in 11 horizontal mergers in the ICT industry between 1990 and 2010. The estimates of merger announcement effects for both merging parties and competitors have predominantly insignificant residuals, suggesting that collusion and anti-competitive effects are not implied by the market reactions to merger announcements. Remedies, both behavioural and structural, appear to be largely ineffective in negating the competition concerns of the Commission, even if properly applied to anti-competitive mergers. Moreover, behavioural remedies appear to transfer rents from merging parties to competitors. These findings suggest that static economic models are ineffective in analysing dynamic markets, possibly as a result of inadequate market definitions.

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File URL: http://dspace.library.uu.nl/bitstream/handle/1874/262533/12-16_new.pdf
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Bibliographic Info

Paper provided by Utrecht School of Economics in its series Working Papers with number 12-16.

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Length: 38 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:use:tkiwps:1216

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Related research

Keywords: competition policy; merger remedies; industrial competitiveness; ICT; event study; M&A;

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  1. Massimo MOTTA & Helder VASCONCELOS, 2003. "Efficiency Gains and Myopic Antitrust Authority in a Dynamic Merger Game," Economics Working Papers ECO2003/23, European University Institute.
  2. Schwert, G. William, 1996. "Markup pricing in mergers and acquisitions," Journal of Financial Economics, Elsevier, vol. 41(2), pages 153-192, June.
  3. Stillman, Robert, 1983. "Examining antitrust policy towards horizontal mergers," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 225-240, April.
  4. McAfee, R. Preston & Williams, Michael A., 1988. "Can event studies detect anticompetitive mergers?," Economics Letters, Elsevier, vol. 28(2), pages 199-203.
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