IDEAS home Printed from https://ideas.repec.org/p/cgs/wpaper/48.html
   My bibliography  Save this paper

Merger regulation, firms, and the co-evolutionary process: An empirical study of internationalisation in the UK alcoholic beverages industry 1985-2005

Author

Listed:
  • Julie Bower
  • Howard Cox

Abstract

We present an historic industry study of the consolidation of the UK alcoholic beverages firms to inform debates in organisation studies relating to co-evolution and the dynamics of internationalisation. We distinguish behavioural and structural co-evolutionary factors in firms’ strategic intent, mirroring the two types of remedies that competition authorities can impose on merging firms. We test this theoretical construct in an empirical investigation of the consolidating UK alcoholic beverages firms between 1985 and 2005. In this era Diageo was formed from the landmark merger of Grand Metropolitan and Guinness. Subsequently Diageo acquired the former international spirits empire of Seagram in partnership with a major competitor. Successful implementation of Diageo’s merger strategy owed much to an ability to navigate the evolving multijurisdictional co-ordinated oversight of cross-border mergers and acquisitions. The formation of novel deal structures as well as co-operation with competitors to circumvent policy intervention were significant co-evolutionary mechanisms that have featured more generally in subsequent international mergers as others have copied these deal structures to achieve similar regulatory outcomes.

Suggested Citation

  • Julie Bower & Howard Cox, 2013. "Merger regulation, firms, and the co-evolutionary process: An empirical study of internationalisation in the UK alcoholic beverages industry 1985-2005," Working Papers 48, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  • Handle: RePEc:cgs:wpaper:48
    as

    Download full text from publisher

    File URL: http://cgr.sbm.qmul.ac.uk/CGRWP48.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jerry Hausman & Gregory Leonard & J. Douglas Zona, 1994. "Competitive Analysis with Differentiated Products," Annals of Economics and Statistics, GENES, issue 34, pages 143-157.
    2. repec:adr:anecst:y:1994:i:34:p:06 is not listed on IDEAS
    3. Patrice Bougette & Stéphane Turolla, 2006. "Merger Remedies at the European Commission: A Multinomial Logit Analysis," Post-Print halshs-00466606, HAL.
    4. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    5. David Martimort, 1999. "The Life Cycle of Regulatory Agencies: Dynamic Capture and Transaction Costs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(4), pages 929-947.
    6. Huygens, M.W. & Baden-Fuller, C.W.F. & van den Bosch, F.A.J. & Volberda, H.W., 2001. "Coevolution of Firm Capabilities and Industry Competition," ERIM Report Series Research in Management ERS-2001-61-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    7. Teresa da Silva Lopes, 2002. "Brands and the Evolution of Multinationals in Alcoholic Beverages," Business History, Taylor & Francis Journals, vol. 44(3), pages 1-30.
    8. Lundin, Rolf A. & Söderholm, Anders, 1995. "A theory of the temporary organization," Scandinavian Journal of Management, Elsevier, vol. 11(4), pages 437-455, December.
    9. Joseph A. Clougherty, 2005. "Antitrust holdup source, cross‐national institutional variation, and corporate political strategy implications for domestic mergers in a global context," Strategic Management Journal, Wiley Blackwell, vol. 26(8), pages 769-790, August.
    10. Paul L. Joskow, 2002. "Transaction Cost Economics, Antitrust Rules, and Remedies," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 18(1), pages 95-116, April.
    11. Pinkse, Joris & Slade, Margaret E., 2004. "Mergers, brand competition, and the price of a pint," European Economic Review, Elsevier, vol. 48(3), pages 617-643, June.
    12. Patrick Massey, 2000. "Market Definition and Market Power in Competition Analysis - Some Practical Issues," The Economic and Social Review, Economic and Social Studies, vol. 31(4), pages 309-328.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dongling Huang & Christian Rojas & Frank Bass, 2008. "What Happens When Demand Is Estimated With A Misspecified Model?," Journal of Industrial Economics, Wiley Blackwell, vol. 56(4), pages 809-839, December.
    2. Friberg, Richard & Romahn, André, 2015. "Divestiture requirements as a tool for competition policy: A case from the Swedish beer market," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 1-18.
    3. Barros, Pedro & Nilssen, Tore & Hoernig, Steffen, 2008. "Keeping Both Eyes Wide Open: The Life of a Competition Authority Among Sectoral Regulators," CEPR Discussion Papers 6861, C.E.P.R. Discussion Papers.
    4. Ryo Sakamoto & Kyle Stiegert, 2018. "Comparing competitive toughness to benchmark outcomes in retail oligopoly pricing," Agribusiness, John Wiley & Sons, Ltd., vol. 34(1), pages 44-60, December.
    5. van Damme, E.E.C. & Pinkse, J., 2005. "Merger Simulation Analysis : An Academic Perspective," Discussion Paper 2005-013, Tilburg University, Tilburg Law and Economic Center.
    6. Vadim Radaev, 2013. "Where Does the Demand for Regulation Come From? The State’s Return to the Retail Trade in Russia," HSE Working papers WP BRP 02/SOC/2013, National Research University Higher School of Economics.
    7. repec:spo:wpmain:info:hdl:2441/6q707l4svn8k3bt630nhgdqgdu is not listed on IDEAS
    8. Pauline Affeldt & Elena Argentesi & Lapo Filistrucchi, 2021. "Estimating Demand with Multi-Homing in Two-Sided Markets," Working Papers wp1165, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. Paul R. Masson & Anindya Sen, 2014. "Uncorking a Strange Brew: The Need for More Competition in Ontario’s Alcoholic Beverage Retailing System," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 414, August.
    10. Alessandro De Chiara & Marco A. Schwarz, 2020. "A Dynamic Theory of Regulatory Capture," Working Papers 2020-12, Faculty of Economics and Statistics, Universität Innsbruck.
    11. Vanessa Alviarez & Keith Head & Thierry Mayer, 2020. "Global giants and local stars: How changes in brand ownership affect competition," Working Papers 2020-13, CEPII research center.
    12. Hassan, Daniel & Monier-Dilhan, Sylvette & Orozco, Valérie, 2011. "Measuring Consumers' Attachment to Geographical Indications: Implications for Competition Policy," TSE Working Papers 11-225, Toulouse School of Economics (TSE).
    13. Mathiesen, Lars & Nilsen, Øivind Anti & Sørgard, Lars, 2011. "Merger simulations with observed diversion ratios," International Review of Law and Economics, Elsevier, vol. 31(2), pages 83-91, June.
    14. Victor Aguirregabiria & Margaret Slade, 2017. "Empirical models of firms and industries," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1445-1488, December.
    15. Slade, Margaret E., 2006. "Merger Simulations of Unilateral Effects : What Can We Learn from the UK Brewing Industry?," The Warwick Economics Research Paper Series (TWERPS) 767, University of Warwick, Department of Economics.
    16. van Damme, E.E.C. & Pinkse, J., 2005. "Merger Simulation Analysis : An Academic Perspective," Other publications TiSEM 1787127b-d84e-4ab6-b040-a, Tilburg University, School of Economics and Management.
    17. G. P. Manish & Colin O’Reilly, 2019. "Banking regulation, regulatory capture and inequality," Public Choice, Springer, vol. 180(1), pages 145-164, July.
    18. Hongqi Ma & Guangjun Shen, 2021. "Do new mayors bring fresh air? Some evidence of regulatory capture in China," Review of Economic Design, Springer;Society for Economic Design, vol. 25(4), pages 227-249, December.
    19. Martimort, David, 2019. ""When Olson Meets Dahl": From Inefficient Groups Formation to Inefficient Policy-Making," CEPR Discussion Papers 13843, C.E.P.R. Discussion Papers.
    20. Ivaldi, Marc & Verboven, Frank, 2005. "Quantifying the effects from horizontal mergers in European competition policy," International Journal of Industrial Organization, Elsevier, vol. 23(9-10), pages 669-691, December.
    21. Carol A. Heimer & Elsinore Kuo, 2021. "Subterranean successes: Durable regulation and regulatory endowments," Regulation & Governance, John Wiley & Sons, vol. 15(S1), pages 63-82, November.

    More about this item

    Keywords

    Alcoholic beverages; Co-evolution; Competition policy; Merger regulation;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cgs:wpaper:48. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Pedro S. Martins (email available below). General contact details of provider: https://edirc.repec.org/data/cgqmwuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.