Post-merger time series analysis: Iron ore mining
In Brazil, mergers and acquisitions are usually analyzed by the antitrust authorities ex post, following a Structure-Conduct-Performance approach close to the US Merger Guidelines. However, this framework was unable to address the complexity posed by a series of acquisitions of four mining companies by the newly privatized national champion Companhia Vale do Rio Doce (known then as CVRD, nowadays as Vale). This article extends a Vector Error Correction model estimated by the Brazilian Ministry of Justice, which eventually came to reinforce the definition of the relevant geographic market and to test for structural breaks in the price series. A formal horizontal merger simulation model was not viable from the available data. Though international prices Granger-caused domestic prices in Brazil, they explain less than a third of the variance. Domestic price hikes in the acquired miners' series were observed above the export price increase not long after the acquisitions, and a structural break could not be rejected. Since convergence of domestic prices to international levels were not to be punished, remedies eventually applied by the Brazilian Antitrust Tribunal focused on preventing CVRD from abusing dominant position to vertically foreclose competitors in logistics, a key competitive issue for the industry.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:ebl:ecbull:v:3:y:2004:i:16:p:1-8 is not listed on IDEAS
- Cati, Regina Celia & Garcia, Marcio G P & Perron, Pierre, 1999. "Unit Roots in the Presence of Abrupt Governmental Interventions with an Application to Brazilian Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(1), pages 27-56, Jan.-Feb..
- Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990.
"Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?,"
8905, Michigan State - Econometrics and Economic Theory.
- Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
- Denis Kwiatkowski & Peter C.B. Phillips & Peter Schmidt, 1991. "Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?," Cowles Foundation Discussion Papers 979, Cowles Foundation for Research in Economics, Yale University.
- Mario Forni, 2004.
"Using Stationarity Tests in Antitrust Market Definition,"
American Law and Economics Review,
Oxford University Press, vol. 6(2), pages 441-464.
- Forni, Mario, 2002. "Using Stationarity Tests in Antitrust Market Definition," CEPR Discussion Papers 3236, C.E.P.R. Discussion Papers.
- Johansen, Søren, 1995.
"A Stastistical Analysis of Cointegration for I(2) Variables,"
Cambridge University Press, vol. 11(01), pages 25-59, February.
- Johansen, S., 1991. "A Statistical Analsysis of Cointegration for I(2) Variables," Papers 77, Helsinki - Department of Economics.
- Joskow, Paul L, 1987. "Contract Duration and Relationship-Specific Investments: Empirical Evidence from Coal Markets," American Economic Review, American Economic Association, vol. 77(1), pages 168-85, March.
- Chang, Hui-Shung, 1994. "Estimating Japanese import shares of iron ore," Resources Policy, Elsevier, vol. 20(2), pages 87-93, June.
- Yin-Wong Cheung & Menzie Chinn, 1995.
"Further investigation of the uncertain unit root in GNP,"
- Cheung, Yin-Wong & Chinn, Menzie D, 1997. "Further Investigation of the Uncertain Unit Root in GNP," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(1), pages 68-73, January.
- Yin-Wong Cheung & Menzie D. Chinn, 1996. "Further Investigation of the Uncertain Unit Root in GNP," NBER Technical Working Papers 0206, National Bureau of Economic Research, Inc.
- Franses, Philip Hans & Haldrup, Niels, 1994. "The Effects of Additive Outliers on Tests for Unit Roots and Cointegration," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 471-78, October.
- Lundmark, Robert & Wårell, Linda, 2008. "Horizontal mergers in the iron ore industry--An application of PCAIDS," Resources Policy, Elsevier, vol. 33(3), pages 129-141, September.
- James G. MacKinnon, 1995.
"Numerical Distribution Functions for Unit Root and Cointegration Tests,"
918, Queen's University, Department of Economics.
- MacKinnon, James G, 1996. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 601-18, Nov.-Dec..
- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
- Dickey, David A & Pantula, Sastry G, 1987. "Determining the Ordering of Differencing in Autoregressive Processes," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 455-61, October.
- Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
- Yin-Wong Cheung & Menzie Chinn, 1995.
"Deterministic, stochastic and segmented trends in aggregate output: A cross-country analysis,"
- Cheung, Yin-Wong & Chinn, Menzie David, 1996. "Deterministic, Stochastic, and Segmented Trends in Aggregate Output: A Cross-Country Analysis," Oxford Economic Papers, Oxford University Press, vol. 48(1), pages 134-62, January.
- Lundmark, Robert & Nilsson, Mats, 2003. "What do economic simulations tell us? Recent mergers in the iron ore industry," Resources Policy, Elsevier, vol. 29(3-4), pages 111-118.
- Haldrup, Niels, . "Empirical analysis of price data in the delineation of the relevant geographical market in competition analysis," Economics Working Papers 2003-9, Department of Economics and Business Economics, Aarhus University.
When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:35:y:2010:i:3:p:141-155. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If references are entirely missing, you can add them using this form.