Optimal pre-merger notification mechanisms - incentives and efficiency of mandatory and voluntary schemes
The authors compare the two merger control systems currently employed worldwide: a mandatory system based on merger size threshold and a voluntary system with ex-post monitoring and fines. The voluntary system possesses two informational advantages: (i) the enforcement agency employs more information -verifiable and non verifiable parameters- to decide the set of mergers to investigate, and (ii) the first move of merging firms reveals useful information to the agency about the competitive risk of a merger. If fines for undue omission to notify are upward limited, then a mixed mechanism is optimal, where small transactions are under a voluntary regime while the big mergers are obliged to report. Remedies for fixing anticompetitive mergers act as an instrument that induces firms to notify the operation, improving further the advantage of the voluntary mechanism.
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- Chongwoo Choe & Chander Shekhar, 2008.
"Compulsory Or Voluntary Pre-Merger Notification? Theory And Some Evidence,"
Monash Economics Working Papers
20/08, Monash University, Department of Economics.
- Choe, Chongwoo & Shekhar, Chander, 2010. "Compulsory or voluntary pre-merger notification? Theory and some evidence," International Journal of Industrial Organization, Elsevier, vol. 28(1), pages 10-20, January.
- Chongwoo, Choe & Shekhar, Chander, 2009. "Compulsory or Voluntary Pre-merger Notification? Theory and Some Evidence," MPRA Paper 13450, University Library of Munich, Germany.
- Johnson, Ronald N & Parkman, Allen M, 1991. "Premerger Notification and the Incentive to Merge and Litigate," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(1), pages 145-62, Spring.
- 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.
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