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Merger Control in the New Economy

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Author Info

  • Lars-Hendrik Röller
  • Christian Wey

Abstract

This paper addresses the potential for conflict between antitrust authorities in the arenaof merger control in the new economy. By "new economy" we mean two relateddevelopments. First, the internationalization of the economy, i.e. the ability to sell andproduce products worldwide, and secondly, markets with certain characteristics such asnetwork effects and other aspects of natural monopoly. We focus on three types ofsubstantive issues in merger control - market definition, assessment of competitiveeffects, and the role of remedies. We argue that the scope for conflict variessignificantly across these three arenas. In particular, conflict over market definition isless likely. By contrast, the assessment of competitive effects and the role of remediesare areas where conflict between antitrust authorities may be more likely in "new economy- type" markets. ZUSAMMENFASSUNG - (Fusionskontrolle in der New Economy) Diese Arbeit identifiziert Konfliktpotentiale zwischen Wettbewerbsbehörden in der Fusionskontrolle von New Economy-Fällen. Mit "New Economy" bezeichnen wir zwei miteinander verbundene Entwicklungen: Erstens die Internalisierung der Ökonomien, womit die Möglichkeiten weltweit zu verkaufen und zu produzieren gemeint sind, und zweitens bestimmte Markteigenschaften wie Netzwerkeffekte sowie Produktionsbedingungen natürlicher Monopole. Wir fokussieren auf drei substantielle Problembereiche internationaler Fusionskontrolle: die Marktabgrenzung, die Einschätzung der Wettbewerbswirkungen und die Rolle von Abhilfemaßnahmen. Wir argumentieren, dass sich die Gefahren internationaler Konflikte sehr unterschiedlich über diese drei Bereiche verteilen. Insbesondere sind Konflikte über die Abgrenzung des relevanten Marktes weniger wahrscheinlich. Im Gegensatz hierzu sprechen eine Reihe von Gründen dafür, dass Konfliktsituationen sowohl bei der Einschätzung der Wettbewerbswirkungen von Fusionen als auch bei der Anwendung von Abhilfemaßnahmen wahrscheinlicher werden in New Economy-Märkten.

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Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 02-02.

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Length: 31 pages
Date of creation: Jan 2002
Date of revision:
Publication status: Published in Netnomics , Vol. 5(1), 2003, pp. 5-20.
Handle: RePEc:wzb:wzebiv:fsiv02-02

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Related research

Keywords: Merger; New Economy; Competition Policy; International Conflict;

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References

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  1. Damien J. NEVEN & Lars-Hendrik RÖLLER, 2000. "Consumer Surplus vs. Welfare Standard in a Political Economy Model of Merger Control," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 00.24, Université de Lausanne, Faculté des HEC, DEEP.
  2. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
  3. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
  4. repec:fth:iniesr:543 is not listed on IDEAS
  5. Joseph Farrell & Garth Saloner, 1986. "Installed Base and Compatibility, With Implications for Product Preannouncements," Working papers 411, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Henning Klodt, 2001. "Conflicts and Conflict Resolution in International Anti-trust: Do We Need International Competition Rules?," The World Economy, Wiley Blackwell, vol. 24(7), pages 877-888, 07.
  7. Neven, Damien J. & Roller, Lars-Hendrik, 2000. "The allocation of jurisdiction in international antitrust," European Economic Review, Elsevier, vol. 44(4-6), pages 845-855, May.
  8. Damien J. Neven & Lars-Hendrik Röller, 2000. "Scope of Conflict in International Merger Control," CIG Working Papers FS IV 00-14, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  9. Röller, Lars-Hendrik & Stennek, Johan & Verboven, Frank, 2000. "Efficiency Gains from Mergers," Working Paper Series 543, Research Institute of Industrial Economics.
  10. Besanko, David & Spulber, Daniel F, 1993. "Contested Mergers and Equilibrium Antitrust Policy," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(1), pages 1-29, April.
  11. Alexis Jacquemin & Peter J. Lloyd & P.K.M. Tharakan & Jean Waelbroeck, 1998. "Competition Policy in an International Setting: The Way Ahead," The World Economy, Wiley Blackwell, vol. 21(8), pages 1179-1183, November.
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