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Negotiating remedies : revealing the merger efficiency gains

  • Andreea Cosnita

    ()

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Panthéon-Sorbonne - CNRS)

  • Jean-Philippe Tropeano

    ()

    (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - UP1 - Université Panthéon-Sorbonne - CNRS)

This paper aims to contribute to the normative economic analysis of mergers control by taking into account the possible efficiency gains for the design of structural merger remedies. We show that a larger asset transfer should be requested from a less efficient merged firm than from a more efficient one, wich conforms with the recommendations of competition policy practitioners. However, since cost savings are private information of merging firms, the Competition Authority will require them to reveal their efficiency gains, so as to tailor the optimal remedy. We propose a revelation mechanism combining the use of divestitures with the regulation of their sale price. We discuss the opportunity of such a merger policy tool, and argue that in practice it may be used to signal the efficiency gains of notified mergers.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00194906.

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Date of creation: Jun 2005
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Handle: RePEc:hal:cesptp:halshs-00194906
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00194906
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  1. 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).
  2. Fridolfsson, Sven-Olof & Stennek, Johan, 2005. "Hold-up of anti-competitive mergers," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 753-775, December.
  3. Bensaid, Bernard & Encaoua, David & Winckler, Antoine, 1994. "Competition, cooperation and mergers: Economic and policy issues," European Economic Review, Elsevier, vol. 38(3-4), pages 637-650, April.
  4. Ramón Faulí-Oller & Luis Corchón, 2000. "- To Merge Or Not To Merge: That Is The Question," Working Papers. Serie AD 2000-01, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  5. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May.
  6. Besanko, David & Spulber, Daniel F, 1993. "Contested Mergers and Equilibrium Antitrust Policy," Journal of Law, Economics and Organization, Oxford University Press, vol. 9(1), pages 1-29, April.
  7. Seldeslachts, Jo & Clougherty, Joseph A. & Barros, Pedro Pita, 2007. "Remedy for Now but Prohibit for Tomorrow: The Deterrence Effects of Merger Policy Tools," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 218, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  8. Lars-Hendrik Röller & Johan Stennek & Frank Verboven, 2000. "Efficiency Gains from Mergers," CIG Working Papers FS IV 00-09, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  9. Joseph Farrell & Carl Shapiro, 1990. "Asset Ownership and Market Structure in Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 275-292, Summer.
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