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The Competitive Impact of the UBS-SBC Merger

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  • Damien NEVEN
  • Thomas VON UNGERN-STERNBERG

Abstract

This short paper reviews the recent anti-trust analysis of banking mergers as well as recent decisions by the Department of Justice and the Bundeskartellamt (in the last few months). We analyse the proposed merger between UBS and SBC in light of this evidence and focus on the domestic retail banking. Three conclusions stand out : - There is overwhelming evidence that the relevant market for some products is local. In particular, the market for loans to small and medium size enterprises should be considered as a local market and this has consistently been the practice of both the US and German authorities. - Barriers to entry in retail banking are significant so that high concentration should be a source of concern. This concern is reflected in recent decisions on bank mergers by the Department of Justice. By the standards of the US practice, the concentration resulting from the UBS-SBC merger would be simply unacceptable and by a wide margin. - Divestiture is the most common remedy in banking and it seems to be effective. Given the concentration entailed by the proposed merger, nothing less than a the full divestiture of one retail network seems adequate.

Suggested Citation

  • Damien NEVEN & Thomas VON UNGERN-STERNBERG, 1998. "The Competitive Impact of the UBS-SBC Merger," Cahiers de Recherches Economiques du Département d'économie 9805, Université de Lausanne, Faculté des HEC, Département d’économie.
    • Handle: RePEc:lau:crdeep:9805
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    References listed on IDEAS

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    1. Hannan, Timothy H., 1991. "Bank commercial loan markets and the role of market structure: evidence from surveys of commercial lending," Journal of Banking & Finance, Elsevier, vol. 15(1), pages 133-149, February.
    2. Myron L. Kwast & Martha Starr-McCluer & John D. Wolken, 1997. "Market definition and the analysis of antitrust in banking," Finance and Economics Discussion Series 1997-52, Board of Governors of the Federal Reserve System (U.S.).
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    Cited by:

    1. repec:prg:jnlpep:v:preprint:id:645:p:1-18 is not listed on IDEAS
    2. Doris Neuberger & Christoph Schacht, 2005. "The Number of Bank Relationships of SMEs: A Disaggregated Analysis for the Swiss Loan Market," Finance 0506018, University Library of Munich, Germany.
    3. Neuberger, Doris & Schacht, Christoph, 2005. "The number of bank relationships of SMEs: A disaggregated analysis for the Swiss loan market," Thuenen-Series of Applied Economic Theory 52, University of Rostock, Institute of Economics.
    4. Xavier Vives, 2001. "Restructuring Financial Regulation in the European Monetary Union," Journal of Financial Services Research, Springer;Western Finance Association, vol. 19(1), pages 57-82, February.
    5. Brett Christophers, 2014. "Competition, Law, and the Power of (Imagined) Geography: Market Definition and the Emergence of Too-Big-to-Fail Banking in the United States," Economic Geography, Clark University, vol. 90(4), pages 429-450, October.
    6. José García Solanes & Diego Peñarrubia, "undated". "Economic Integration and Banking Mergers Strategies," Working Papers on International Economics and Finance 01-07, FEDEA.
    7. Karolína Vozková & Petr Teplý, 2018. "Determinants of Bank Fee Income in the EU Banking Industry - Does Market Concentration Matter?," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(1), pages 3-20.

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    More about this item

    Keywords

    UBS-SBC merger; concentration; barriers to entry; local markets;
    All these keywords.

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations

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