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Settle for Now but Block for Tomorrow: The Deterrence Effects of Merger Policy Tools

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  • Jo Seldeslachts
  • Joseph A. Clougherty
  • Pedro Pita Barros

Abstract

Antitrust policy involves not just the regulation of anticompetitive behavior but also an important deterrence effect. Neither scholars nor policy makers have fully researched the deterrence effects of merger policy tools because they have been unable to empirically measure these effects. We consider the ability of different antitrust actions-blocked mergers, negotiated settlements, and monitorings-to deter firms from engaging in mergers. We use cross-jurisdiction/pantime data on merger policy to empirically estimate the impact of antitrust actions on future merger frequencies. We find that blocked mergers lead to decreased merger notifications in subsequent periods and that negotiated settlements weakly increase future merger notifications; in other words, blocked mergers involve a deterrence effect, but negotiated settlements do not. (c) 2009 by The University of Chicago. All rights reserved.

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  • Jo Seldeslachts & Joseph A. Clougherty & Pedro Pita Barros, 2009. "Settle for Now but Block for Tomorrow: The Deterrence Effects of Merger Policy Tools," Journal of Law and Economics, University of Chicago Press, vol. 52(3), pages 607-634, August.
  • Handle: RePEc:ucp:jlawec:v:52:y:2009:i:3:p:607-634
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    Cited by:

    1. Joseph A. Clougherty & Tomaso Duso & Miyu Lee & Jo Seldeslachts, 2016. "Effective European Antitrust: Does Ec Merger Policy Generate Deterrence?," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1884-1903, October.
    2. Pedro Barros & Joseph Clougherty & Jo Seldeslachts, 2010. "How to Measure the Deterrence Effects of Merger Policy: Frequency or Composition?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(1), pages 1-8.
    3. Lars Sorgard & Andreea Cosnita-Langlais, 2013. "Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare?," Post-Print hal-01668416, HAL.
    4. 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.
    5. 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.
    6. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2011. "How effective is European merger control?," European Economic Review, Elsevier, vol. 55(7), pages 980-1006.
    7. 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.
    8. 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.
    9. Joseph Clougherty, 2010. "Competition Policy Trends and Economic Growth: Cross-National Empirical Evidence," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(1), pages 111-127.
    10. Patrice Bougette, 2011. "Négociation d'engagements en matière de concentrations : une perspective d'économiste," Post-Print halshs-00580669, HAL.
    11. Cosnita-Langlais, Andreea & Tropeano, Jean-Philippe, 2012. "Do remedies affect the efficiency defense? An optimal merger-control analysis," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 58-66.
    12. Budzinski Oliver & Kuchinke Björn A., 2012. "Deal or No Deal? Consensual Arrangements as an Instrument of European Competition Policy," Review of Economics, De Gruyter, vol. 63(3), pages 265-292, December.
    13. Budzinski, Oliver, 2012. "Würde eine unabhängige europäische Wettbewerbsbehörde eine bessere Wettbewerbspolitik machen?," Ilmenau Economics Discussion Papers 78, Ilmenau University of Technology, Institute of Economics.
    14. Joseph A. Clougherty & Jo Seldeslachts, 2013. "The Deterrence Effects of US Merger Policy Instruments," Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(5), pages 1114-1144, October.
    15. Barbara Baarsma & Ron Kemp & Rob Noll & Jo Seldeslachts, 2012. "Let’s Not Stick Together: Anticipation of Cartel and Merger Control in The Netherlands," De Economist, Springer, vol. 160(4), pages 357-376, December.
    16. Albert Banal‐Estañol & Jo Seldeslachts, 2011. "Merger Failures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(2), pages 589-624, June.
    17. Dertwinkel-Kalt, Markus & Wey, Christian, 2014. "Remedies vs. Extreme Options in Merger Control," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100397, Verein für Socialpolitik / German Economic Association.
    18. Richard J. Grimbeek & Sunel Grimbeek & Steven F. Koch, 2011. "The Consistency of Merger Decisions in a Developing Country: The South African Competition Commission," Working Papers 201117, University of Pretoria, Department of Economics.
    19. Redkina, Anastasia & Lagodyuk, Ekaterina, 2016. "The deterrent effect of Russian control of mergers: An Empirical Study," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 79-104, February.
    20. Barros, Pedro P. & Clougherty, Joseph A. & Seldeslachts, Jo, 2013. "Europeanization of EU member-state competition policy: The commission's leadership role," International Review of Law and Economics, Elsevier, vol. 34(C), pages 41-51.

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