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Unilateral Effects Screens for Partial Horizontal Acquisitions: The Generalized HHI and GUPPI

Author

Listed:
  • Duarte Brito

    (Universidade Nova de Lisboa)

  • António Osório

    (Universitat Rovira i Virgili)

  • Ricardo Ribeiro

    () (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto)

  • Hélder Vasconcelos

    (Universidade do Porto)

Abstract

Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive effects of partial acquisitions. We propose a generalization to a partial horizontal acquisition setting of the two most traditional indicators used to screen unilateral anti-competitive effects: the Herfindahl-Hirschman Index and the Gross Upward Price Pressure Index. The proposed generalized indicators can deal with all types of acquisitions that may lessen competition in the industry: acquisitions by owners that are internal to the industry (rival firms) and engage in cross-ownership, as well as acquisitions by owners that are external to the industry and engage in common-ownership. Furthermore, these indicators can deal with direct and indirect acquisitions, which may or may not correspond to control, and nest full mergers as a special case. We provide an empirical application to several acquisitions in the wet shaving industry. The results seem to suggest that (i) a full merger induces higher unilateral anti-competitive effects than a partial controlling acquisition involving the same firms, (ii) a partial controlling acquisition induces higher unilateral anti-competitive effects than a partial non-controlling acquisition involving the same firms and the same financial stakes, and (iii) an acquisition by owners that are internal to the industry induces higher unilateral anti-competitive effects than an acquisition (involving the same firms and the same stakes) by external owners that participate in more than one competitor firm.

Suggested Citation

  • Duarte Brito & António Osório & Ricardo Ribeiro & Hélder Vasconcelos, 2015. "Unilateral Effects Screens for Partial Horizontal Acquisitions: The Generalized HHI and GUPPI," Working Papers de Economia (Economics Working Papers) 02, Católica Porto Business School, Universidade Católica Portuguesa.
  • Handle: RePEc:cap:wpaper:022015
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    References listed on IDEAS

    as
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    Cited by:

    1. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2013. "Quantifying the Coordinated Effects of Partial Horizontal Acquisitions," CEPR Discussion Papers 9536, C.E.P.R. Discussion Papers.
    2. Duarte Brito & Einer Elhauge & Ricardo Ribeiro & Helder Vasconcelos, 2018. "Modeling Horizontal Shareholding with Ownership Dispersion," Working Papers de Economia (Economics Working Papers) 01, Católica Porto Business School, Universidade Católica Portuguesa.

    More about this item

    Keywords

    Antitrust; Partial Horizontal Acquisitions; Oligopoly; Screening Indicators; HHI; GUPPI;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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