Efficiency Defense in EU and US Horizontal Merger Control if Costs are Endogenous

2016 ◽  
Vol 17 (1) ◽  
pp. 48-60
Author(s):  
Manfred Neumann
Keyword(s):  
Profit Maximization ◽  
Consumer Surplus ◽  
Merger Control ◽  
Horizontal Merger ◽  
Fixed Costs ◽  
Horizontal Mergers ◽  
Merger Guidelines ◽  
Eu And Us ◽  
Profit Maximizing ◽  
Total Welfare

Abstract If fixed costs are endogenous, following from profit maximization, horizontal mergers are always profitable. They cause the price to rise and consumer surplus to decrease. A case of horizontal merger in which, according to the requirement of US and EU Merger Guidelines for an efficiency defense to be acceptable, the price declines or remains constant does not exist and therefore cannot be expected by profit maximizing partners to arise following a merger. Merger control should be guided by focusing on total welfare. Permitting cooperation in R&D, although profitable, is likely to be detrimental to welfare.

Merger Strategies And Antitrust Concerns

2013 ◽  
pp. 536-558 ◽  
Author(s):  
Gregory Werden ◽  
Luke Froeb
Keyword(s):  
Mergers And Acquisitions ◽  
Competitive Environment ◽  
Horizontal Merger ◽  
Antitrust Law ◽  
Horizontal Mergers ◽  
Merger Guidelines ◽  
Unilateral Effects ◽  
Modern Economic ◽  
Merger And Acquisitions ◽  
The U.S

This chapter explains the application of antitrust law to merger and acquisitions, especially horizontal transactions, which involve direct competitors. The chapter outlines the analysis the U.S. enforcement agencies set out in their Horizontal Merger Guidelines―a fact-intensive analysis focusing on the precise competitive interaction between the merging firms and the competitive environment in which they operate. The chapter focuses mainly on unilateral effects, which arise from the elimination of head-to-head competition between the merging firms. Several distinct unilateral effects are distinguished and illustrated with real-world examples. In particular, the chapter explains how modern economic analysis identifies the relatively few horizontal mergers and acquisitions found to violate antitrust law.

scholarly journals The 2010 Horizontal Merger Guidelines After 10 Years

2021 ◽  
Author(s):  
Joseph Farrell ◽  
Carl Shapiro
Keyword(s):  
Federal Trade Commission ◽  
Analytical Techniques ◽  
Economic Research ◽  
Horizontal Merger ◽  
Horizontal Mergers ◽  
Special Issue ◽  
Department Of Justice ◽  
Substantial Impact ◽  
Merger Guidelines ◽  
The Impact

AbstractThis paper introduces the Special Issue of the Review of Industrial Organization that studies the impact of the 2010 Horizontal Merger Guidelines after 10 years On August 19, 2010, the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued newly updated Horizontal Merger Guidelines (2010 Guidelines) [See https://www.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf.]. The 2010 Guidelines begin by stating: “These Guidelines outline the principal analytical techniques, practices, and the enforcement policy of the Department of Justice and the Federal Trade Commission (the “Agencies”) with respect to mergers and acquisitions involving actual or potential competitors (“horizontal mergers”) under the federal antitrust laws.” Since the first Merger Guidelines were issued by the DOJ 1968, the merger guidelines have been an important channel by which economic research and learning affects antitrust enforcement. Each iteration of the merger guidelines has reflected the economic thinking of the day. Each iteration also has made a substantial impact on merger enforcement and the development of antitrust law. This special issue examines the impact of the 2010 Merger Guidelines after 10 years.

scholarly journals Mergers with Differentiated Products: Where Do We Stand?

2021 ◽  
Vol 58 (1) ◽  
pp. 179-212
Author(s):  
Tommaso Valletti ◽  
Hans Zenger
Keyword(s):  
Economic Analysis ◽  
Differentiated Products ◽  
Horizontal Merger ◽  
10Th Anniversary ◽  
Merger Guidelines ◽  
Competitive Effects ◽  
Unilateral Effects ◽  
Market Shares ◽  
Differentiated Product Markets

AbstractOn the occasion of the 10th anniversary of the 2010 U.S. Horizontal Merger Guidelines, this article provides an overview of the state of economic analysis of unilateral effects in mergers with differentiated products. Drawing on our experience with merger enforcement in Europe, we discuss both static and dynamic competition, with a special emphasis on the calibration of competitive effects. We also discuss the role of market shares and structural presumptions in differentiated product markets.

Upward Pricing Pressure in Horizontal Merger Analysis: Reply to Epstein and Rubinfeld

2010 ◽  
Vol 10 (1) ◽  
Author(s):  
Joseph Farrell ◽  
Carl Shapiro
Keyword(s):  
Horizontal Merger ◽  
Horizontal Mergers ◽  
Merger Analysis

We reply here to a comment by Epstein and Rubinfeld to our paper on the antitrust evaluation of horizontal mergers.

Capacity Constraints and Horizontal Merger Effects

2018 ◽  
Vol 63 (4) ◽  
pp. 444-454
Author(s):  
Jay Ezrielev
Keyword(s):  
Binding Capacity ◽  
Market Concentration ◽  
Capacity Constraints ◽  
Market Definition ◽  
Horizontal Merger ◽  
Horizontal Mergers ◽  
Price Effects ◽  
Analytical Tools ◽  
The Relationship ◽  
Merger Simulation

This article examines how capacity constraints affect horizontal mergers. Binding capacity constraints for merging firms may mitigate merger price effects, but capacity constraints for nonmerging firms may either amplify or mitigate such effects. The presence of capacity constraints for both the merging and nonmerging firms in a market further complicates the analysis of merger price effects. Capacity constraints may also confound the relationship between market concentration and merger price effects. In addition, capacity constraints affect market definition analysis and analytical tools such as merger simulation and upward pricing pressure indexes. Analyzing the effects of capacity constraints on mergers continues to be a challenge for merger reviews.

scholarly journals Public Monopoly and Economic Efficiency: Evidence from the Pennsylvania Liquor Control Board's Entry Decisions

2013 ◽  
Vol 103 (2) ◽  
pp. 831-862 ◽  
Author(s):  
Katja Seim ◽  
Joel Waldfogel
Keyword(s):  
Profit Maximization ◽  
Consumer Surplus ◽  
Political Influence ◽  
Profit Sharing ◽  
Control Board ◽  
Limited Evidence ◽  
Liquor Store ◽  
Government Operation ◽  
The Government ◽  
The Impact

We estimate a spatial model of liquor demand to analyze the impact of government-controlled retailing on entry patterns. In the absence of the Pennsylvania Liquor Control Board, the state would have roughly 2.5 times the current number of stores, higher consumer surplus, and lower payments to liquor store employees. With just over half the number of stores that would maximize welfare, the government system is instead best rationalized as profit maximization with profit sharing. Government operation mitigates, but does not eliminate, free entry's bias against rural consumers. We find only limited evidence of political influence on entry. (JEL D42, D72, L11, L12, L43, L81)

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