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Ex-Post Merger Review and Divestitures

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Abstract

Divestitures have received little attention in ex-post evaluations of mergers. In partial remedy we simulate the effects of the Carlsberg-Pripps merger in the Swedish beer market and compare the predicted outcomes with those observed ex-post. There are no important price increases following the merger and prices of divested beers fell. Our merger simulations, that are based on a random coefficients logit model, capture these pricing patterns and suggest that the divestitures were important in limiting price increases. Knowledge of the retailer's markup rules allows us to discard retailer behavior as an explanation for the pricing patterns.

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  • Romahn, André & Friberg, Richard, 2012. "Ex-Post Merger Review and Divestitures," IESE Research Papers D/1056, IESE Business School.
  • Handle: RePEc:ebg:iesewp:d-1056
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    File URL: http://www.iese.edu/research/pdfs/WP-1056-E.pdf
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    5. Elzinga, Kenneth G, 1969. "The Antimerger Law: Pyrrhic Victories?," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 43-78, April.
    6. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2009. "Generating Evidence to Guide Merger Enforcement," CPI Journal, Competition Policy International, vol. 5.
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    8. Dario Focarelli & Fabio Panetta, 2003. "Are Mergers Beneficial to Consumers? Evidence from the Market for Bank Deposits," American Economic Review, American Economic Association, vol. 93(4), pages 1152-1172, September.
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    10. Adriaan R. Soetevent & Marco A. Haan & Pim Heijnen, 2008. "Do Auctions and Forced Divestitures increase Competition?," Tinbergen Institute Discussion Papers 08-117/1, Tinbergen Institute, revised 02 Aug 2011.
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    Cited by:

    1. Brito, Duarte & Pereira, Pedro & Ramalho, Joaquim J.S., 2013. "Mergers, coordinated effects and efficiency in the Portuguese non-life insurance industry," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 554-568.
    2. L. Aguzzoni & E. Argentesi & P. Buccirossi & L. Ciari & T. Duso & M. Tognoni & C. Vitale, 2013. "They Played the Merger Game: A Retrospective Analysis in the UK Videogames Market," Working Papers wp908, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Aguzzoni, Luca & Argentesi, Elena & Ciari, Lorenzo & Duso, Tomaso & Tognoni, Massimo, 2016. "Ex-post Merger Evaluation in the U.K. Retail Market for Books," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 170-200.
    4. Vivienne Pham & David Prentice, 2013. "A Random Coefficients Logit Analysis of the Counterfactual: A Merger and Divestiture in the Australian Cigarette Industry," Working Papers 2013.04, School of Economics, La Trobe University.
    5. Lougui, Monia & Broström, Anders, 2016. "New firm formation in the wake of mergers and acquisitions: Are employees pushed or pulled into entrepreneurship?," Working Paper Series in Economics and Institutions of Innovation 427, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

    More about this item

    Keywords

    Merger simulation; ex-post merger review; divestitures; demand for beer;

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • 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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