Claim efficiencies or offer remedies? An analysis of litigation strategies in EC mergers

Peter L. Ormosi

International Journal of Industrial Organization, 2012, vol. 30, issue 6, 578-592

Abstract: Efficiency defence and merger remedies are key components in most merger control regimes. Although in many jurisdictions both the provision of efficiency-related evidence and remedy offers are at the merging firms' discretion, most previous works have only analysed them separately. This paper is an attempt to empirically model the system of decisions that firms face in merger litigation where they are allowed to choose what combination of efficiency claims and settlement offers to make. The main novelty of this work is the use of data from company reports on the merger-generated synergy expectations signalled to shareholders, which allows the direct empirical testing of some of the assumptions and findings from previous works. Evidence is presented that the current EC merger control regime is incapable of extracting information from firms on their efficiency expectations and the identity and experience of the legal advisor plays a key role in this; that pre-merger synergy expectations enhance the willingness to offer remedies; and finally, that the cost of delay plays a central role in designing firms' litigation strategy, especially when these costs exceed the cost of the remedy.

Keywords: Merger litigation; Merger remedies; Synergies; Efficiency defence (search for similar items in EconPapers)
JEL-codes: K21 K41 L40 L41 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:30:y:2012:i:6:p:578-592

DOI: 10.1016/j.ijindorg.2012.07.003

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