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Determinants of the success of remedy offers: Evidence from European Community mergers

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  • Peter L. Ormosi

    (Centre for Competition Policy, University of East Anglia)

Abstract

This article proposes an empirical method for finding the determinants of the size of remedy offers relative to the level required by the European Commission in individual cases. Evidence is presented that merger characteristics, such as the size of the transaction, or the number of horizontal overlaps do not affect the probability of a remedy offer being successful. It is also shown that pre-merger expectations about merger-generated efficiencies increase the likelihood of successful offers. These findings are very important features of EC merger control, and a novelty in the existing literature. If parties are delay-averse, then the complexity of the case matters very little, as merging parties appear to be able to offer something outright acceptable for the Commission. This may lead to a counter-productive situation where less delay-averse mergers become more prone to offering too much, which can result in over-fixing the competition problem for those mergers where savings would be more likely.

Suggested Citation

  • Peter L. Ormosi, 2009. "Determinants of the success of remedy offers: Evidence from European Community mergers," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2009-11, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2009_11
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    References listed on IDEAS

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    1. repec:bla:jindec:v:49:y:2001:i:2:p:137-60 is not listed on IDEAS
    2. Seldeslachts, Jo & Clougherty, Joseph A. & Barros, Pedro Pita, 2007. "Remedy for Now but Prohibit for Tomorrow: The Deterrence Effects of Merger Policy Tools," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 218, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin & Zulehner, Christine, 2003. "The effects of mergers: an international comparison," International Journal of Industrial Organization, Elsevier, vol. 21(5), pages 625-653, May.
    4. Patrice Bougette & Stéphane Turolla, 2006. "Merger Remedies at the European Commission: A Multinomial Logit Analysis," Post-Print halshs-00466606, HAL.
    5. Stephen Davies & Matthew Olczak, 2008. "Assessing the Efficacy of Structural Merger Remedies: Choosing Between Theories of Harm?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2008-28, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    6. Farrell, Joseph, 2003. "Negotiation and Merger Remedies: Some Problems," Competition Policy Center, Working Paper Series qt9p72k8fn, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    7. Bruce Lyons & Andrei Medvedev, 2007. "Bargaining over Remedies in Merger Regulation," Working Papers 07-3, Centre for Competition Policy, University of East Anglia.
    8. Chopard, Bertrand & Cortade, Thomas & Cosnita-Langlais, Andreea, 2015. "Success and failure of bargaining in merger control: The case of asset divestitures," Economic Modelling, Elsevier, vol. 49(C), pages 254-259.
    9. Duso, Tomaso & Gugler, Klaus & Yurtoglu, Burcin B., 2011. "How effective is European merger control?," European Economic Review, Elsevier, vol. 55(7), pages 980-1006.
    10. repec:reg:rpubli:61 is not listed on IDEAS
    11. Stephen Davies & Bruce Lyons, 2007. "Mergers and Merger Remedies in the EU," Books, Edward Elgar Publishing, number 13008.
    12. Bertrand Chopard & Thomas Cortade & Andreea Cosnita-Langlais, 2008. "Settlement in Merger Cases: Remedies and Litigation," EconomiX Working Papers 2008-10, University of Paris Nanterre, EconomiX.
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    Cited by:

    1. Luke Garrod & Bruce Lyons, 2011. "Early Settlement and Errors in Merger Control," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2011-05, Centre for Competition Policy, University of East Anglia, Norwich, UK..

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    More about this item

    Keywords

    European Commission; mergers; merger remedies; saving expectations; efficiency defence; litigation; bargaining.;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • L49 - Industrial Organization - - Antitrust Issues and Policies - - - Other

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