The Political Economy of European Merger Control: Evidence using Stock Market Data
The objective of this paper is to investigate the determinants of European Union (EU) merger control decisions. We consider a sample of 167 EU mergers between 1990 and 2002 and evaluate their competitive consequences by the reaction of the stock market price of competitors to the merging firms. We then account for the discrepancies between the actual and optimal decisions as indicated by the stock market in terms of the political economy surrounding the cases. Our results suggest that the commissionâ€™s decisions cannot be solely accounted for as protecting consumer surplus. The institutional and political environment does matter. As far as influence is concerned, however, our data suggest that the commissionâ€™s decisions are not sensitive to firmsâ€™ interests. Instead, the evidence suggests that other factorsâ€”such as market definition and procedural aspects, as well as country and industry effectsâ€”do play a significant role.
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.:
- Steven Kaplan & Michael S. Weisbach, 1990.
"The Success of Acquisitions: Evidence From Disvestitures,"
NBER Working Papers
3484, National Bureau of Economic Research, Inc.
- Kaplan, Steven N & Weisbach, Michael S, 1992. " The Success of Acquisitions: Evidence from Divestitures," Journal of Finance, American Finance Association, vol. 47(1), pages 107-38, March.
- Röller, Lars-Hendrik & Stennek, Johan & Verboven, Frank, 2000.
"Efficiency Gains from Mergers,"
Working Paper Series
543, Research Institute of Industrial Economics.
- Malcolm B. Coate, 2002. "A Test of Political Control of the Bureaucracy: The Case of Mergers," Economics and Politics, Wiley Blackwell, vol. 14(1), pages 1-18.
- Salinger, M.A. & Schumann, L., 1988. "Horizontal Mergers And The Market Value Of Rivals: The In Play Effect," Papers fb-_88-03, Columbia - Graduate School of Business.
- Fridolfsson, Sven-Olof & Stennek, Johan, 2000. "Why Event Studies Do Not Detect Anti-Competitive Mergers," Working Paper Series 542, Research Institute of Industrial Economics.
- G. William Schwert, 1994.
"Mark-Up Pricing in Mergers and Acquisitions,"
NBER Working Papers
4863, National Bureau of Economic Research, Inc.
- Neven, Damien J & Röller, Lars-Hendrik, 2000.
"Consumer Surplus vs. Welfare Standard in a Political Economy Model of Merger Control,"
CEPR Discussion Papers
2620, C.E.P.R. Discussion Papers.
- Neven, Damien J. & Roller, Lars-Hendrik, 2005. "Consumer surplus vs. welfare standard in a political economy model of merger control," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 829-848, December.
- 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.
- Damien J. Neven & Lars-Hendrik Röller, 2000. "Consumer Surplus vs. Welfare Standard in a Political Economy Model of Merger Control," CIG Working Papers FS IV 00-15, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Stillman, Robert, 1983. "Examining antitrust policy towards horizontal mergers," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 225-240, April.
- Neven, Damien J., 2001. "How should "protection" be evaluated in Article III GATT disputes?," European Journal of Political Economy, Elsevier, vol. 17(2), pages 421-444, June.
- Khemani, R S & Shapiro, Daniel M, 1993. "An Empirical Analysis of Canadian Merger Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 161-77, June.
When requesting a correction, please mention this item's handle: RePEc:ucp:jlawec:v:50:y:2007:p:455-489. 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: (Journals Division)
If references are entirely missing, you can add them using this form.