Giebe, Thomas and Lee, Miyu (2019): Competitors In Merger Control: Shall They Be Merely Heard Or Also Listened To?
This is the latest version of this item.
PDF
MPRA_paper_62428.pdf Download (793kB) |
|
Preview |
PDF
MPRA_paper_97415.pdf Download (732kB) | Preview |
Abstract
There are legal grounds to hear competitors in merger control proceedings, and competitor involvement has gained significance. To what extent this is economically sensible is the focus of our game-theoretic analysis. The competition authority applies some welfare standard while the competitor cares about its own profit. In expectation, there is neither a pure conflict nor a complete alignment of interest. We distinguish hard and soft information and ask whether hearing the competitor might convey valuable but non-verifiable information to the authority. We identify a case where, based on the authority's verifiable information, the authority's decision is improved by following the competitor's selfish but non-verifiable communication. We argue that the practical relevance of this constellation is very limited, especially so under a consumer welfare standard. Thus, non-verifiable information should mostly be ignored. Complementary to our analysis, we provide empirical data of competitor involvement in EU merger cases and give an overview of the legal discussion in the EU and US.
Item Type: | MPRA Paper |
---|---|
Original Title: | Competitors In Merger Control: Shall They Be Merely Heard Or Also Listened To? |
Language: | English |
Keywords: | merger control, antitrust, European Commission, signaling, efficiency, competitors, rivals, competition |
Subjects: | C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance K - Law and Economics > K2 - Regulation and Business Law > K21 - Antitrust Law K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior L - Industrial Organization > L4 - Antitrust Issues and Policies |
Item ID: | 97415 |
Depositing User: | Dr. Thomas Giebe |
Date Deposited: | 12 Dec 2019 02:03 |
Last Modified: | 06 Oct 2024 20:10 |
References: | Amir, R., Diamantoudi, E., & Xue, L. (2009). Merger performance under uncertain efficiency gains. International Journal of Industrial Organization, 27 , 264–273. doi:10. 1016/j.ijindorg.2008.08.006. Banal-Estañol, A., Macho-Stadler, I., & Seldeslachts, J. (2008). Endogenous mergers and endogenous efficiency gains: The efficiency defence revisited. International Journal of Industrial Organization, 26, 69–91. doi:10.1016/j.ijindorg.2006.10.007. Banerjee, A., & Eckard, E. W. (1998). Are mega-mergers anticompetitive? evidence from the first great merger wave. The Rand Journal of Economics, 29, 803–827. doi:10.2307/2556095. Cleary Gottlieb Steen & Hamilton (2004). EU merger control: A brief history. Clougherty, J. A., & Duso, T. (2009). The impact of horizontal mergers on rivals: gains to being left outside a merger. Journal of Management Studies, 46, 1365–1395. doi:10.1111/j.1467-6486.2009.00852.x. Clougherty, J. A., & Duso, T. (2011). Using rival effects to identify synergies and improve merger typologies. Strategic Organization, 9, 310–335. doi:10.1177/1476127011421536. Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management , 37 , 39–67. doi:10.1177/0149206310388419. Crawford, V. (1998). A survey of experiments on communication via cheap talk. Journal of Economic theory, 78, 286–298. doi:10.1006/jeth.1997.2359. Crawford, V. P., & Sobel, J. (1982). Strategic information transmission. Econometrica, 50, 1431–1451. doi:10.2307/1913390. Creane, A., & Davidson, C. (2004). Multidivisional firms, internal competition, and the merger paradox. Canadian Journal of Economics/Revue canadienne d’économique, 37, 951–977. doi:10.1111/j.0008-4085.2004.00255.x. Cunha, M., Sarmento, P., & Vasconcelos, H. (2014). Uncertain efficiency gains and merger policy. Discussion Paper, . Datta, D. K., Pinches, G. E., & Narayanan, V. (1992). Factors influencing wealth creation from mergers and acquisitions: A meta-analysis. Strategic management journal, 13, 67–84. doi:10.1002/smj.4250130106. Davidson, C., & Mukherjee, A. (2007). Horizontal mergers with free entry. International Journal of Industrial Organization, 25, 157–172. doi:http://dx.doi.org/10.1016/j.ijindorg.2006.03.003. Deneckere, R., & Davidson, C. (1985). Incentives to form coalitions with Bertrand competition. The RAND Journal of Economics, 16, 473–486. doi:10.2307/2555507. Diesenhaus, J. L. (1987). Competitor standing to challenge a merger of rivals: The applicability of strategic behavior analysis. California Law Review, 75, 2057–2115. doi:10.2307/3480548. Durande, S., & Williams, K. (2005). The practical impact of the exercise of the right to be heard: A special focus on the effect of oral hearings and the role of the hearing officers. Competition policy newsletter, 2, 22–28. Duso, T., Gugler, K., & Yurtoglu, B. (2010). Is the event study methodology useful for merger analysis? A comparison of stock market and accounting data. International Review of Law and Economics, 30, 186–192. doi:10.1016/j.irle.2010.02.001. Duso, T., Gugler, K., & Yurtoglu, B. B. (2011). How effective is European merger control? European Economic Review, 55 , 980–1006. doi:10.1016/j.euroecorev. 2011.04.003. Farrell, J. (2012). Market data and participants’ views in horizontal merger analysis. Concurrences Law & Economics, 2, 21–26. Farrell, J., & Rabin, M. (1996). Cheap talk. The Journal of Economic Perspectives, 10, 103–118. doi:10.1257/jep.10.3.103. Farrell, J., & Shapiro, C. (2001). Scale economies and synergies in horizontal merger analysis. Antitrust Law Journal, 68, 685–710. doi:https://www.jstor.org/stable/ 40843493. Faulí-Oller, R., & Motta, M. (1996). Managerial incentives for takeovers. Journal of Economics & Management Strategy, 5, 497–514. doi:10.1111/j.1430-9134.1996. 00497.x. Fridolfsson, S.-O., & Stennek, J. (2005). Why mergers reduce profits and raise share prices–a theory of preemptive mergers. Journal of the European Economic Association, 3, 1083–1104. doi:10.1162/1542476054729455. González, A. (2007). Eliciting information from interested parties in merger control. Discussion Paper, . Gürtler, O., & Kräkel, M. (2009a). Hostile takeover and costly merger control. Public Choice, 141, 371–389. doi:10.1007/s11127-009-9457-4. Gürtler, O., & Kräkel, M. (2009b). On the inefficiency of merger control. Economics Letters, 102, 53–55. doi:10.1016/j.econlet.2008.11.009. Harker, M., Hviid, M., & Wright, K. (2011). The EU rules on standing in merger cases: should firms have to demonstrate “harm to competition”? European Law Review, 36, 500–523. Heller, C.-P. (2015). On informational asymmetries in merger policy. BDPEMS Working Paper, . Heubeck, S., Smythe, D. J., & Zhao, J. (2006). A note on the welfare effects of horizontal mergers in asymmetric linear oligopolies. Annals of Economics and Finance, 7 , 29–47. Huck, S., Konrad, K. A., & Müller, W. (2001). Big fish eat small fish: on merger in Stackelberg markets. Economics letters, 73, 213–217. doi:10.1016/S0165-1765(01)00490-6. Huck, S., Konrad, K. A., & Müller, W. (2004). Profitable horizontal mergers without cost advantages: The role of internal organization, information and market structure. Economica, 71, 575–587. doi:10.1111/j.0013-0427.2004.00389.x. Hundt, R. (2011). Wireless: The common medium of conversation. Media Law & Policy, 20, 95–117. Kräkel, M., & Müller, D. (2015). Merger efficiency and managerial incentives. International Journal of Industrial Organization, 41, 51–63. doi:10.1016/j.ijindorg.2015.05.004. Krishna, V., & Morgan, J. (2008). Cheap talk. In S. N. Durlauf, & L. E. Blume (Eds.), The New Palgrave Dictionary of Economics: Volume 1 – 8 (pp. 751–756). London: Palgrave Macmillan UK. doi:10.1007/978-1-349-58802-2_221. Lagerlöf, J., & Heidhues, P. (2005). On the desirability of an efficiency defense in merger control. International Journal of Industrial Organization, 23, 803–827. doi:10.1016/j.ijindorg.2005.08.005. Lahiri, S., & Ono, Y. (1988). Helping minor firms reduces welfare. The Economic Journal, 98, 1199–1202. doi:10.2307/2233727. Lommerud, K. E., Straume, O. R., & Sorgard, L. (2001). Merger profitability in unionized oligopoly. CEPR Discussion Paper No. 2738, . Lyons, B. R. (2003). Could politicians be more right than economists? A theory of merger standards. EUI Working Paper (RSC No. 2003/14), . Matsusaka, J. G. (1993). Takeover motives during the conglomerate merger wave. The RAND Journal of Economics, 24, 357–379. doi:10.2307/2555963. Mialon, S. H. (2008). Efficient horizontal mergers: The effects of internal capital reallo- cation and organizational form. International Journal of Industrial Organization, 26, 861–877. doi:10.1016/j.ijindorg.2007.07.004. Milgrom, P., & Roberts, J. (1986). Relying on the information of interested parties. The RAND Journal of Economics, 17, 18–32. doi:10.2307/2555625. Miller, N. H. (2014). Modeling the effects of mergers in procurement. International Journal of Industrial Organization, 37, 201–208. doi:10.1016/j.ijindorg.2014.10. 001. Miller, N. H., & Weinberg, M. (2014). Mergers facilitate tacit collusion: An empirical investigation of the Miller/Coors joint venture. Discussion Paper, . Motta, M. (2004). Competition policy: theory and practice. Cambridge University Press. Neven, D., & Röller, L.-H. (2002). Discrepancies between markets and regulators: an analysis of the first ten years of EU merger control. In K. Lundvall (Ed.), The Pros and Cons of Merger Control: 10th Anniversary of the Swedish Competition Authority (pp. 13–38). Konkurrensverket (Swedish Competition Authority). Neven, D. J., & Röller, L.-H. (2005). Consumer surplus vs. welfare standard in a political economy model of merger control. International Journal of Industrial Organization, 23, 829–848. doi:10.1016/j.ijindorg.2005.08.011. Nocke, V., & Whinston, M. D. (2010). Dynamic merger review. Journal of Political Economy, 118, 1200–1251. doi:10.1086/658161. Perry, M. K., & Porter, R. H. (1985). Oligopoly and the incentive for horizontal merger. The American Economic Review, 75, 219–227. doi:https://www.jstor.org/stable/1812716. Pittman, R. W. (2007). Consumer surplus as the appropriate standard for antitrust enforcement. Discussion Paper, . Riley, J. G. (2001). Silver signals: Twenty-five years of screening and signaling. Journal of Economic Literature, 39, 432–478. doi:10.1257/jel.39.2.432. Roll, R. (1986). The hubris hypothesis of corporate takeovers. Journal of Business, 59, 197–216. doi:https://www.jstor.org/stable/2353017. Salant, S. W., Switzer, S., & Reynolds, R. J. (1983). Losses from horizontal merger: the effects of an exogenous change in industry structure on Cournot-Nash equilibrium. The Quarterly Journal of Economics, 98, 185–199. doi:10.2307/1885620. Salinger, M. A. (1988). Vertical mergers and market foreclosure. The Quarterly Journal of Economics, 103, 345–356. doi:10.2307/1885117. Sørgard, L. (2009). Optimal merger policy: Enforcement vs. deterrence. The Journal of Industrial Economics, 57, 438–456. doi:10.1111/j.1467-6451.2009.00389.x. Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87, 355–374. doi:10.2307/1882010. Stigler, G. J. (1950). Monopoly and oligopoly by merger. The American Economic Review, 40, 23–34. doi:https://www.jstor.org/stable/1818020. Stiglitz, J. E. (2002). Information and the change in the paradigm in economics. American Economic Review, 92, 460–501. doi:https://www.jstor.org/stable/3083351. Stucke, M. E., & Grunes, A. P. (2012). The AT&T/T-Mobile merger: What might have been? Journal of European Competition Law & Practice, 3, 196–205. doi:10.1093/ jeclap/lps019. Van Arsdall, M. G., & Piehl, M. J. (2014). The evolving role of competitors in merger review. Crowell & Moring LLP, Law360 Client Information, . Van Bael & Bellis (2005). Competition law of the European Community. Kluwer Law International. Vasconcelos, H. (2010). Efficiency gains and structural remedies in merger control. The Journal of Industrial Economics, 58, 742–766. doi:10.1111/j.1467-6451.2010. 00436.x. Vermeulen, F., & Barkema, H. (2001). Learning through acquisitions. Academy of Management journal, 44, 457–476. doi:10.5465/3069364. Werden, G. J., Joskow, A. S., & Johnson, R. L. (1991). The effects of mergers on price and output: Two case studies from the airline industry. Managerial and Decision Economics, 12, 341–352. doi:10.1002/mde.4090120502. Williamson, O. E. (1968). Economies as an antitrust defense: The welfare tradeoffs. The American Economic Review, 58, 18–36. doi:https://www.jstor.org/stable/ 1831653. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/97415 |
Available Versions of this Item
-
Competitors In Merger Control: Shall They Be Merely Heard Or Also Listened To? (deposited 18 Feb 2019 14:17)
- Competitors In Merger Control: Shall They Be Merely Heard Or Also Listened To? (deposited 12 Dec 2019 02:03) [Currently Displayed]