Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive e¤ects of partial acquisitions. We propose a generalization to a partial horizontal acquisition setting of the two most traditional indicators used to screen unilateral anti-competitive e¤ects: the Hel…ndahl-Hirschman Index and the Gross Upward Price Pressure Index. The proposed generalized indicators can deal with all types of acquisitions that may lessen competition in the industry: acquisitions by owners that are internal to the industry (rival …rms) and engage in cross-ownership, as well as acquisitions by owners that are external to the industry and engage in common-ownership. Furthermore, these indicators can deal with direct and indirect acquisitions, which may or may not correspond to control, and nest full mergers as a special case. We provide an empirical application to several acquisitions in the wet shaving industry. The results seem to suggest that (i) a full merger induces higher unilateral anti-competitive e¤ects than a partial controlling acquisition involving the same …rms, (ii) a partial controlling acquisition induces higher unilateral anti-competitive e¤ects than a partial non-controlling acquisition involving the same …rms and the same …nancial stakes, and (iii) an acquisition by owners that are internal to the industry induces higher unilateral anti-competitive e¤ects than an acquisition (involving the same …rms and the same stakes) by external owners that participate in more than one competitor …rm. JEL Classi…cation: L13, L41, L66Keywords: Antitrust, Partial Horizontal Acquisitions, Oligopoly, Screening Indicators, HHI, GUPPIWe w o u ld like to th a n k M a ria n a C u n h a , J o ã o G a ta , P e d ro P e re ira , A n a R o d rig u e s, a s w e ll a s nu m e ro u s se m in a rs p a rtic ip a nts a t A u to rid a d e d a C o n c o rrê n c ia a n d U n ive rsid a d e C a tó lic a P o rtu g u e sa , fo r h e lp fu l c o m m e nts a n d su g g e stio n s. A ll re m a in in g e rro rs a re o f c o u rse o u r ow n .
This paper investigates how overlapping ownership a¤ects quality levels, consumer surplus, …rms' pro…ts and welfare when the industry is a vertically di¤erentiated duopoly and quality choice is endogenous. This issue is particularly relevant since recent empirical evidence suggests that overlapping ownership constitutes an important feature of a multitude of vertically di¤erentiated industries. We show that overlapping ownership while detrimental for welfare, may increase or decrease the quality gap, consumer surplus and …rms'pro…ts. In particular, when the overlapping ownership structure is such that the high quality …rm places a positive weight on the low quality …rm's pro…ts, the incentives of the high quality …rm to compete aggressively reduce. This may increase the equilibrium quality of the low quality …rm, which in turn may lead to higher consumer surplus, despite higher prices. JEL Classi…cation: L13; L41.
Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive e¤ects of partial acquisitions. We propose an empirical structural methodology to quantify the coordinated e¤ects of such acquisitions on di¤erentiated products industries, by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained. The methodology can deal with settings involving all type of owners and ownership rights: owners that can be internal to the industry (rival …rms) and external to the industry; and ownership rights that can involve …nancial interests and corporate control, can be direct and indirect, can be partial or full. We provide an empirical application of our proposed methodology to several acquisitions in the wet shaving industry that give rise to cross-and common-ownership structures. The results seem to suggest that the incentives of (i) the acquiring party's …rm to coordinate are non-decreasing after an acquisition (independently of whether it involves full or partial …nancial or corporate control rights, by internal or external owners), (ii) the acquired …rm to coordinate are non-decreasing after acquisitions involving full or partial corporate control rights, but non-increasing after acquisitions involving full or partial …nancial rights, and (iii) the remaining …rms in the industry to coordinate are non-increasing after an acquisition (again, independently of whether it involves full or partial …nancial or corporate control rights, by internal or external owners).
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