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Merger Remedies at the European Commission: A Multinomial Logit Analysis

  • Patrice Bougette
  • Stéphane Turolla

This paper aims to build and empirically evaluate a discrete choice model of merger remedies as a basis for policy analysis. The database consists of 229 merger cases accepted in Phase I or Phase II of the European merger process between 1990 and 2005. We focus on the following question: Which merging firms’ characteristics lead the European Commission to decide whether to require conditional acceptance? Although a lot of empirical studies have been carried out these last years, ours is distinguished by at least two original features. First, we explore determinanting factors of the Commission’s decisions with a neural network model differentiating cases accepted with or without remedies (either structural or behavioral). Secondly, we implement three multinomial logit models. We find that variables related to high market power lead more frequently to a remedy outcome, whatever the phase. Innovative industries such as energy, transportation and communications positively affect the probability of a behavioral remedy. Lastly, former Competition Commissioner Mario Monti’s policy appears to be pro-remedy, i.e. seeking concessions from merging parties.

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File URL: http://www.lameta.univ-montp1.fr/Documents/DR2006-08.pdf
File Function: First version, 2006
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Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 06-08.

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Length: 28 pages
Date of creation: Sep 2006
Date of revision: Feb 2008
Handle: RePEc:lam:wpaper:06-08
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  1. Asch, Peter, 1975. "The Determinants and Effects of Antitrust Activity," Journal of Law and Economics, University of Chicago Press, vol. 18(2), pages 575-81, October.
  2. Tomaso Duso & Damien J. Neven & Lars-Hendrik Röller, 2007. "The Political Economy of European Merger Control: Evidence using Stock Market Data," Journal of Law and Economics, University of Chicago Press, vol. 50, pages 455-489.
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  5. Aktas, Nihat & de Bodt, Eric & Roll, Richard, 2004. "Market Response to European Regulation of Business Combinations," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(04), pages 731-757, December.
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  8. 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.
  9. Posner, Richard A, 1970. "A Statistical Study of Antitrust Enforcement," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 365-419, October.
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  11. Brady, Una & M. Feinberg, Robert, 2000. "An examination of stock-price effects of EU merger control policy," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 885-900, August.
  12. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
  13. Margaret F. Barton, 1979. "Conditional Logit Analysis of FCC Decisionmaking," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 399-411, Autumn.
  14. Bergman, Mats A. & Jakobsson, Maria & Razo, Carlos, 2005. "An econometric analysis of the European Commission's merger decisions," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 717-737, December.
  15. Tomaso Duso & Klaus Gugler & Burcin Yurtoglu, 2005. "EU Merger Remedies: A Preliminary Empirical Assessment," CIG Working Papers SP II 2005-16, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  16. Coate, Malcolm B & Higgins, Richard S & McChesney, Fred S, 1990. "Bureaucracy and Politics in FTC Merger Challenges," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 463-82, October.
  17. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919.
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  19. Siegfried, John J, 1975. "The Determinants of Antitrust Activity," Journal of Law and Economics, University of Chicago Press, vol. 18(2), pages 559-74, October.
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