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An Empirical Assessment of the 2004 EU Merger Policy Reform

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  • Tomaso Duso
  • Klaus Gugler
  • Florian Szücs

Abstract

Based on a database of 326 merger cases scrutinized by the European Commission between 1990 and 2007, we evaluate the economic impact of the change in Euro-pean merger legislation in 2004. We first propose a general framework to assess merger policy effectiveness, which is based on standard oligopoly theory and makes use of stock market reactions as an external assessment of the merger and the merger control decisions. We then focus on four different dimensions of effec-tiveness: 1) legal certainty; 2) frequency and determinants of type I and type II er-rors; 3) rent-reversion achieved by different merger policy tools; and 4) deterrence of anti-competitive mergers. To infer the economic impact of the merger policy reform, we compare the results of our four tests before and after its introduction. Our results suggest that the policy reform seems to have been only a modest im-provement of European merger policy. ZUSAMMENFASSUNG - Eine empirische Bewertung der in 2004 eingeführten Reform der Europäischen Fusionskontrolle - Basierend auf einer Stichprobe von 326 Fusionsfällen, welche der Europäischen Kommission zwischen Januar 1990 und Dezember 2007 vorlagen, wird in diesem Beitrag die Wirkung der in Mai 2004 eingeführten neuen Regulierung für Firmenfusionen erforscht. Zuerst wird ein allgemeiner Ansatz vorgeschlagen, um die Effektivität der Fusionskontrolle zu evaluieren, welcher auf der Oligopoltheorie beruht und Fusionen und Fusionskontrollentscheidungen anhand der Reaktionen von Aktienmärkten bewertet. Vier unterschiedliche Aspekte der Effektivität der Fusionskontrolle werden dann untersucht: 1) die Rechtssicherheit, 2) die Häufigkeit und Determinanten von Entscheidungsfehlern erster und zweier Ordnung seitens der Kommission, 3) die effektive Reduzierung der wettbewerbswidrigen Wirkungen von Fusionen, erzielt von unterschiedlichen wettbewerbspolitischen Instrumenten und 4) die Abschreckung von wettbewerbsschädigenden Fusionen. Um die Wirking der neuen Regulierung ab
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Suggested Citation

  • Tomaso Duso & Klaus Gugler & Florian Szücs, 2013. "An Empirical Assessment of the 2004 EU Merger Policy Reform," Economic Journal, Royal Economic Society, vol. 123(11), pages 596-619, November.
  • Handle: RePEc:ecj:econjl:v:123:y:2013:i:11:p:f596-f619
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    Cited by:

    1. Clougherty, Joseph A. & Duso, Tomaso & Lee, Miyu & Seldeslachts, Jo, 2016. "Effective European Antitrust : Does EC Merger Policy Generate Deterrence?," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 1884-1903.
    2. repec:kap:revind:v:53:y:2018:i:3:d:10.1007_s11151-018-9645-9 is not listed on IDEAS
    3. Carletti, Elena & Ongena, Steven & Siedlarek, Jan-Peter & Spagnolo, Giancarlo, 2015. "The Impact of Merger Legislation on Bank Mergers," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 530, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    4. Gugler, Klaus & Szücs, Florian, 2016. "Merger externalities in oligopolistic markets," International Journal of Industrial Organization, Elsevier, vol. 47(C), pages 230-254.
    5. Joseph Clougherty & Tomaso Duso, 2015. "Correcting for Self-Selection Based Endogeneity in Management Research: A Review and Empirical Demonstration," Discussion Papers of DIW Berlin 1465, DIW Berlin, German Institute for Economic Research.
    6. Tomaso Duso & Jo Seldeslachts & Florian Szücs, 2017. "The Impact of Competition Policy Enforcement on the Functioning of EU Energy Markets," Discussion Papers of DIW Berlin 1674, DIW Berlin, German Institute for Economic Research.
    7. Andreea Cosnita-Langlais, 2016. "Enforcement of Merger Control. Theoretical Insights for Its Procedural Design," Revue économique, Presses de Sciences-Po, vol. 67(HS1), pages 39-51.
    8. Sven Heim & Kai Hüschelrath & Ulrich Laitenberger, 2016. "The Duration of the EC Merger Control Process: Determinants and the Impact of the 2004 Merger Regulation Reform," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 23(1), pages 37-62, February.
    9. Ghosal Vivek, 2011. "The Law and Economics of Enhancing Cartel Enforcement: Using Information From Non-Cartel Investigations to Prosecute Cartels," Review of Law & Economics, De Gruyter, vol. 7(2), pages 501-538, December.
    10. Budzinski, Oliver, 2012. "Impact evaluation of merger control decisions," Ilmenau Economics Discussion Papers 75, Ilmenau University of Technology, Institute of Economics.
    11. Ormosi, Peter L., 2012. "Tactical dilatory practice in litigation: Evidence from EC merger proceedings," International Review of Law and Economics, Elsevier, vol. 32(4), pages 370-377.
    12. Ralph Siebert, 2016. "The Impact of Horizontal Mergers on Market Structure: Evidence from the Semiconductor Industry," CESifo Working Paper Series 5911, CESifo Group Munich.
    13. Oliver Budzinski, 2011. "Impact Evaluation of Merger Decisions," Working Papers 112/11, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
    14. repec:bla:ausecp:v:57:y:2018:i:3:p:376-393 is not listed on IDEAS
    15. repec:ura:ecregj:v:1:y:2018:i:2:p:547-561 is not listed on IDEAS

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    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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