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Assessing EU Merger Control through Compensating Efficiencies

Author

Listed:
  • Pauline Affeldt
  • Tomaso Duso
  • Klaus Gugler
  • Joanna Piechucka

Abstract

Worldwide, the overwhelming majority of large horizontal mergers are cleared by antitrust authorities unconditionally. The presumption seems to be that efficiencies from these mergers are sizeable. We calculate the compensating efficiencies that would prevent a merger from harming consumers for 1,014 mergers affecting 12,325 antitrust markets scrutinized by the European Commission between 1990 and 2018. Compensating efficiencies seem too large to be achievable for many mergers. Barriers to entry and the number of firms active in the market are the most important factors determining their size. We highlight concerns about the Commission’s merger enforcement being too lax.

Suggested Citation

  • Pauline Affeldt & Tomaso Duso & Klaus Gugler & Joanna Piechucka, 2021. "Assessing EU Merger Control through Compensating Efficiencies," CESifo Working Paper Series 9403, CESifo.
    • Handle: RePEc:ces:ceswps:_9403
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    References listed on IDEAS

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    1. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-126, March.
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    6. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2011. "How effective is European merger control?," European Economic Review, Elsevier, vol. 55(7), pages 980-1006.
    7. Werden, Gregory J, 1996. "A Robust Test for Consumer Welfare Enhancing Mergers among Sellers of Differentiated Products," Journal of Industrial Economics, Wiley Blackwell, vol. 44(4), pages 409-413, December.
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    10. Orley Ashenfelter & Daniel Hosken & Matthew Weinberg, 2014. "Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers," Journal of Law and Economics, University of Chicago Press, vol. 57(S3), pages 67-100.
    11. Tomaso Duso & Damien J. Neven & Lars-Hendrik Röller, 2007. "The Political Economy of European Merger Control: Evidence using Stock Market Data," Journal of Law and Economics, University of Chicago Press, vol. 50(3), pages 455-489.
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    Cited by:

    1. John T. Scott, 2023. "Research Diversity and Invention," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(2), pages 179-197, March.
    2. Tomaso Duso & Lea Bernhardt & Joanna Piechucka, 2024. "The Evolution of Theories of Harm in EU Merger Control," Discussion Papers of DIW Berlin 2090, DIW Berlin, German Institute for Economic Research.
    3. Souillard, Baptiste, 2024. "Unilateral effects of mergers with price regulation and quality competition," Economics Letters, Elsevier, vol. 242(C).
    4. Tomaso Duso & Lea Bernhardt & Joanna Piechucka, 2024. "The Evolution of Theories of Harm in EU Merger Control," CESifo Working Paper Series 11218, CESifo.

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    More about this item

    Keywords

    compensating efficiencies; efficiency gains; merger control; concentration; screens; HHI; mergers; unilateral effects; market definition; entry barriers;
    All these keywords.

    JEL classification:

    • L19 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Other
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L00 - Industrial Organization - - General - - - General
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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