Efficiency Defense in EU and US Horizontal Merger Control if Costs are Endogenous

Neumann Manfred
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Neumann Manfred: University of Erlangen-Nürnberg,Erlangen, Germany

German Economic Review, 2016, vol. 17, issue 1, 48-60

Abstract: If fixed costs are endogenous, following from profit maximization, horizontal mergers are always profitable. They cause the price to rise and consumer surplus to decrease. A case of horizontal merger in which, according to the requirement of US and EU Merger Guidelines for an efficiency defense to be acceptable, the price declines or remains constant does not exist and therefore cannot be expected by profit maximizing partners to arise following a merger. Merger control should be guided by focusing on total welfare. Permitting cooperation in R&D, although profitable, is likely to be detrimental to welfare.

Keywords: Horizontal merger control; efficiency defense (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1111/geer.12066

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