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Bundling and the GE-Honeywell Merger

Author

Listed:
  • Barry Nalebuff

    (School of Management)

Abstract

The economic theory of bundling has moved from the classroom and academic journals to the public policy arena. Its debut was dramatic. On July 3, 2001, the European Commission blocked the $42 billion merger between GE and Honeywell. A primary reason for their objection to this combination was a concern over bundling. This paper uses the context of the proposed GE-Honeywell merger to address the concerns raised by bundling. We set out the theory as put forth by the Commission and try to reconcile this theory with both the economic theory of bundling and the facts of the case. We discuss what is meant by bundling and explain when it is a potential problem and when it is not. Based on this understanding, we propose anti-trust policy recommendations to deal with the novel issues raised by bundling.

Suggested Citation

  • Barry Nalebuff, 2002. "Bundling and the GE-Honeywell Merger," Yale School of Management Working Papers ysm303, Yale School of Management.
    • Handle: RePEc:ysm:somwrk:ysm303
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    Citations

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    Cited by:

    1. Oliver Budzinski & Isabel Ruhmer, 2010. "Merger Simulation In Competition Policy: A Survey," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 277-319.
    2. Andrea Greppi & Domenico Menicucci, 2021. "On Bundling and Entry Deterrence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(4), pages 561-581, June.
    3. Noriaki Matsushima & Tomomichi Mizuno, 2009. "Input specificity and product differentiation," ISER Discussion Paper 0745, Institute of Social and Economic Research, Osaka University.
    4. Ricardo Flores-Fillol & Rafael Moner-Colonques, 2011. "Endogenous Mergers of Complements with Mixed Bundling," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(3), pages 231-251, November.
    5. Oliver Budzinski & Arndt Christiansen, 2007. "The Oracle/PeopleSoft Case: Unilateral Effects, Simulation Models and Econometrics in Contemporary Merger Control," Marburg Working Papers on Economics 200702, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. Philipp Schumacher, 2013. "The EU’s flawed assessment of horizontal aspects in GE/Honeywell: re-visiting the last pillar of the European prohibition decision," European Journal of Law and Economics, Springer, vol. 35(2), pages 211-240, April.
    7. Oliver Budzinski, 2008. "A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?," MAGKS Papers on Economics 200803, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    8. Lars-Hendrik Roeller & Oliver Stehmann, 2006. "The Year 2005 at DG Competition: The Trend towards a More Effects-Based Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 29(4), pages 281-304, December.
    9. Mike, Károly, 2015. "Kevesebb vagy több közgazdaságtant?. Valentiny Pál-Kiss Ferenc László-Nagy Csongor István (szerk.): Verseny és szabályozás, 2013. MTA KRTK KTI, Budapest, 2014, 372 o [More or less economics?. Pál V," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 335-340.

    More about this item

    Keywords

    Bundling; Antitrust; EU; GE; Honeywell;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • K0 - Law and Economics - - General
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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