Merger Control and Investment: the Role of Efficiency Assessment

We study how the precision of merger review a¤ects rmsincentives to generate merger-specific efficiencies. Before the review, merging parties can invest in a project combining complementary assets; the project can be implemented only if the merger is approved. The merger control authority observes a noisy signal about these efficiencies and approves if the evidence satises a consumer-surplus standard. In a binary-investment benchmark with exogenous signal threshold, greater signal precision fosters investment incentives. The same holds locally with continuous investment and holds as well with Bayesian approval. Better information can therefore strengthen, rather than weaken, incentives to generate merger efficiencies.