Is Divestiture Effective as a Merger Remedy in the U.S. Beer Industry?

Xiangrui Wang, Ron C. Mittelhammer, Thomas Marsh and Jill McCluskey
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Ron C. Mittelhammer: Washington State University

Review of Industrial Organization, 2023, vol. 62, issue 1, No 1, 18 pages

Abstract: Abstract Divestiture is a widely used policy instrument that regulators implement for mitigating the potentially negative market effects of mergers. Several recent studies have generated empirical evidence that supports the effectiveness of various divestiture mechanisms. We provide a case study in which divestiture resulted in the price of the divested brands’ increasing a small but significant amount following the merger. The case is the 2013 merger between Anheuser–Busch InBev and Grupo Modelo. A reduced-form retrospective difference-in-difference estimation approach is used in the analysis. The conclusions of our study underscore the critical nature of idiosyncratic market details that can substantially affect the effectiveness of the use of divestiture for addressing negative market effects of mergers.

Keywords: Divestiture; Retrospective merger analysis; Beer industry (search for similar items in EconPapers)
JEL-codes: G34 L66 Q18 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s11151-022-09888-5

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