The Political Economy of European Merger Control: Evidence using Stock Market Data

This paper aims to build and empirically evaluate a discrete choice model of merger remedies as a basis for policy analysis. The database consists of 229 merger cases accepted in Phase I or Phase II of the European merger process between 1990 and 2005. We focus on the following question: Which merging firms' characteristics lead the European Commission to decide whether to require conditional acceptance? Although a lot of empirical studies have been carried out these last years, ours is distinguished by at least two original features. First, we explore determinanting factors of the Commission's decisions with a neural network model differentiating cases accepted with or without remedies (either structural or behavioral). Secondly, we implement three multinomial logit models. We find that variables related to high market power lead more frequently to a remedy outcome, whatever the phase. Innovative industries such as energy, transportation and communications positively affect the probability of a behavioral remedy. Lastly, former Competition Commissioner Mario Monti's policy appears to be pro-remedy, i.e. seeking concessions from merging parties.

Section: Different Approaches To Assessing An Antitrust Authoritymentioning

confidence: 79%

Section: Different Approaches To Assessing An Antitrust Authoritymentioning

confidence: 99%

Merger Remedies at the European Commission: A Multinomial Logit Analysis

Bougette

Turolla²

2006

“…The basic insight behind this categorization of mergers is that transactions which enhance collusion (or market-power) will increase the underlining value and profitability of competitor firms on average, while mergers which enhance efficiencies (or true synergies) will decrease the underlining value and profitability of competitor firms on average (Duso et al, 2007(Duso et al, , 2011(Duso et al, , 2013.…”

Section: Empirical Demonstrationmentioning

confidence: 99%

“…With these measures at hand, we follow Duso et al (2007Duso et al ( , 2011Duso et al ( , 2013 in operationalizing our merger typology.…”

Section: Mcwilliams and Siegel 1997)mentioning

confidence: 99%

Correcting for Self-Selection Based Endogeneity in Management Research: A Review and Empirical Demonstration

Clougherty

Duso

2015

Self Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractFoundational to the discipline of management is the idea that organizational decisions are a function of expected outcomes; hence, the customary empirical approach to employ multivariate techniques that regress performance outcome variables on discrete measures of organizational choices (e.g., investments, trainings, strategies and other managerial decision variables) potentially suffer from self-selection based endogeneity bias. Selectioneffects represent an internal validity threat as they can lead to biased parameters that render erroneous empirical results and incorrect conclusions with regard to the veracity of theoretical assertions. Our review of the empirical literature suggests that the issue of selection-effects has received increasing attention in management; yet, the techniques to correct for selection-effects have not always been employed in the proper manner, thus estimations often suffer from design shortcomings that potentially render flawed empirical findings. We explain the nature of self-selection based endogeneity bias and review the techniques available to researchers in management to correct for selection-effects when organizational decisions are discrete in nature. Employing data on M&A investment decisions and rival-firm value reactions, we provide empirical examples that demonstrate the tradeoffs involved with the alternative techniques.

“…A different approach is to evaluate the reaction of non-merging firms (Dafny (2009) and Duso et al (2007 and2013)). For example, Gugler and Szuecs (2016) investigate whether mergers exert profit externalities on competitors.…”

Section: Introductionmentioning

confidence: 99%

Heterogeneous Merger Impacts on Competitive Outcomes

Siebert

2017

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Mergers realize heterogeneous competitive effects on profits, production, and prices. To date, it is unclear whether differential merger outcomes are caused mostly by firms' technology or product market attributes. Furthermore, empirical merger studies conventionally assume that, conditional on regressors, the impact of mergers on outcomes is the same for every firm. We allow the merger responses to vary across firms, even after controlling for regressors, and apply a random-coefficient or heterogeneous treatment effect model (in the context of Angrist and Krueger (1999), Heckman, Urzua, and Vytlacil (2006), and Cerulli (2012)). Based on a comprehensive dataset on the static random access memory industry, we find that firms' postmerger output further increases (and postmerger price further declines) if merging firms are more efficient, operate in more elastic product markets, are more innovative, and acquire knowledge in technological areas that are relatively unexplored to themselves. A further interesting insight is that product market characteristics cause stronger postmerger outcome heterogeneities than do technology market characteristics. We also find that the postmerger effects accounting for heterogeneities differ greatly from those that consider homogeneous postmerger outcome effects. Our estimation results provide evidence that ignoring heterogeneous outcome effects can result in heterogeneity bias, just as ignoring premerger heterogeneities can lead to selectivity bias. Terms of use: Documents inJEL-Codes: L110, L130, L520, O310, O320, O380.Keywords: heterogeneous treatment effects, horizontal mergers, market power effects, merger evaluation, premerger heterogeneity, postmerger heterogeneity. Ralph Siebert