Negotiating remedies: revealing the merger efficiency gains

Andreea Cosnita-Langlais () and Tropeano, Jean-Philippe ()
Additional contact information
Tropeano, Jean-Philippe: EUREQua, http://eurequa.univ-paris1.fr

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: This paper aims to contribute to the normative economic analysis of mergers by taking into account the possible efficiency gains for the design of structural merger remedies. We show that a larger asset transfer should be requested from a less efficient merged firm than from a more efficient one, which comforts the proportionality principle advocated by competition policy practitioners. However, since cost savings are private information of merging firms, the Competition Authority will require them to reveal their efficiency gains, so as to tailor the optimal remedy. We propose a revelation mechanism combining the use of divestitures with the regulation of asset sale prices. We discuss the opportunity of such an instrument, and argue that in practice Competition Authorities might be entiled to infer a lot from the sale price of divestitures.

Keywords: Merger control; structural merger remedies; asymmetric information. (search for similar items in EconPapers)
JEL-codes: D82 L41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-ind
Date: 2005-06, Revised 2006-04

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ftp://mse.univ-paris1.fr/pub/mse/cahiers2005/V05047.pdf (application/pdf)

Related works:
Working Paper: Negotiating remedies: revealing the merger efficiency gains (2008)
Working Paper: Negotiating remedies: revealing the merger efficiency gains (2005)
Journal Article: Negotiating remedies: Revealing the merger efficiency gains (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:mse:wpsorb:v05047

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