Quantifying the coordinated effects of partial horizontal acquisitions

Duarte Brito, Ricardo Ribeiro and Helder Vasconcelos

European Economic Review, 2018, vol. 110, issue C, 108-149

Abstract: Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive effects of partial acquisitions. We propose an empirical structural methodology, which can deal with settings involving all types of owners and ownership rights, to quantify the coordinated effects of partial horizontal acquisitions on differentiated products industries, by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained. We also provide an empirical application of the methodology to several acquisitions in the wet shaving industry that give rise to cross- and common-ownership structures. The results are as follows (i) the incentives to coordinate of the firms that the acquiring party is – pre-acquisition – able to influence are non-decreasing with any acquisition; (ii) the incentives to coordinate of the acquired firm are non-decreasing with acquisitions involving full or partial both financial and corporate control rights, but non-increasing with acquisitions involving full or partial solely financial rights; and (iii) the incentives to coordinate of the remaining firms in the industry are non-increasing with any acquisition. This implies that the coordinated effects of partial horizontal acquisitions are, in general, ambiguous, which illustrates the importance of an empirical structural methodology.

Keywords: Antitrust; Coordinated effects; Partial acquisitions; Oligopoly; Differentiated products; Demand estimation (search for similar items in EconPapers)
JEL-codes: C54 D12 L13 L41 L66 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Quantifying the Coordinated Effects of Partial Horizontal Acquisitions (2017)
Working Paper: Quantifying the Coordinated Effects of Partial Horizontal Acquisitions (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:110:y:2018:i:c:p:108-149

DOI: 10.1016/j.euroecorev.2018.07.009

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