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Success and failure of bargaining in merger control: The case of asset divestitures

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  • Chopard, Bertrand
  • Cortade, Thomas
  • Cosnita-Langlais, Andreea

Abstract

This paper studies the bargaining over merger asset divestiture in the shadow of appeal litigation. We provide theoretical foundations for a recurrent empirical finding, namely that the opportunity cost born by the merging firms due to merger control has direct consequences for the remedy divestiture agreement. Increased severity of the appeal court improves the imperfect merger screening implemented by the agency through remedy negotiation, which possibly argues in favor of a judicial complement to the “regulatory” merger policy enforcement. But the main recommendation for agencies is to devise tools to better deal with the asymmetric information that limits the effectiveness of their merger policy enforcement.

Suggested Citation

  • Chopard, Bertrand & Cortade, Thomas & Cosnita-Langlais, Andreea, 2015. "Success and failure of bargaining in merger control: The case of asset divestitures," Economic Modelling, Elsevier, vol. 49(C), pages 254-259.
  • Handle: RePEc:eee:ecmode:v:49:y:2015:i:c:p:254-259
    DOI: 10.1016/j.econmod.2015.04.013
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    References listed on IDEAS

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    Cited by:

    1. Patrice Bougette, 2011. "Négociation d'engagements en matière de concentrations : une perspective d'économiste," Post-Print halshs-00580669, HAL.

    More about this item

    Keywords

    Merger control; Divestiture settlement; Asymmetric information;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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