Threatening to buy: Private equity buyouts and antitrust policy

Pehr-Johan Norbäck, Lars Persson and Joacim Tåg

Economics Letters, 2018, vol. 164, issue C, 31-34

Abstract: Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise merger-stable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable – but consumer surplus-enhancing – mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.

Keywords: Antitrust policy; M&As; Private equity; Temporary ownership (search for similar items in EconPapers)
JEL-codes: G32 G34 L13 L22 L40 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Threatening to Buy: Private Equity Buyouts and Antitrust Policy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:164:y:2018:i:c:p:31-34

DOI: 10.1016/j.econlet.2017.12.027

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