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The Oracle/PeopleSoft case: unilateral effects, simulation models and econometrics in contemporary merger control

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  • Budzinski, Oliver
  • Christiansen, Arndt

Abstract

An increasingly important part of contemporary merger control both in the US and the EU is unilateral effects analysis, particularly with regard to oligopolistic mergers. In practice, this requires econometric analyses of past market data and, above all, the construction of simulation models in order to quantify the price effects in each specific case. The review of the merger between the software firms Oracle and PeopleSoft in 2003/04 has been the most important instance of parallel application of these sophisticated economic tools by the EU and US authorities so far. This makes an in-depth study of the case going from the controversial issue of market definition to the specificities of the competitive assessment worthwhile. Therefore, we highlight certain similarities as well as (minor) differences between the EU and US proceedings. Interestingly, despite serious initial concerns the transaction was not blocked nor even required to be modified in the any of the two jurisdictions. We derive a number of interesting insights and, in particular, point out problems and lessons associated with the use of sophisticated economic tools in contemporary merger control. In addition to case-specific factors, the major insights encompass the continued relevance of market definition, the need to accompany predictive economic evidence with compatible reasoning and the benefits of including the economics of dynamic and evolutionary competition. --

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Bibliographic Info

Paper provided by University of Duisburg-Essen, Faculty for Economics and Business Administration in its series IBES Diskussionsbeiträge with number 157.

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Date of creation: 2007
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Handle: RePEc:zbw:udewwd:157

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Keywords: Merger control; unilateral effects; econometric analysis; simulation models; market definition;

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  16. Aigner, Gisela & Budzinski, Oliver & Christiansen, Arndt, 2007. "The analysis of coordinated effects in EU merger control: where do we stand after Sony/BMG and Impala?," IBES Diskussionsbeiträge 156, University of Duisburg-Essen, Faculty for Economics and Business Administration.
  17. Arndt Christiansen and Wolfgang Kerber & Wolfgang Kerber, 2006. "Competition Policy with Optimally Differentiated Rules Instead of "Per se Rules vs. Rule of Reason"," Marburg Working Papers on Economics 200606, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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Citations

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Cited by:
  1. Budzinski, Oliver, 2012. "Empirische Ex-Post Evaluation von wettbewerbspolitischen Entscheidungen: Methodische Anmerkungen," Ilmenau Economics Discussion Papers 69, Ilmenau University of Technology, Institute of Economics.
  2. 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.
  3. Oliver Budzinski, 2008. "A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?," MAGKS Papers on Economics 200803, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  4. 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.
  5. Budzinski, Oliver, 2012. "Impact evaluation of merger control decisions," Ilmenau Economics Discussion Papers 75, Ilmenau University of Technology, Institute of Economics.
  6. Markus Schief & Peter Buxmann & Dirk Schiereck, 2013. "Mergers and Acquisitions in the Software Industry," Business & Information Systems Engineering, Springer, vol. 5(6), pages 421-431, December.

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