Targeted evaluations in a data-poor world

Lilla Csorgo and Harshal Chitale

New Zealand Economic Papers, 2017, vol. 51, issue 2, 136-147

Abstract: Competition agencies have faced increased pressure to demonstrate their worth by showing they have positively contributed to consumer surplus or market efficiency. As a result, there has been increased interest in carrying out ex post reviews of cleared mergers, seeking to determine whether prices have increased. A demonstration whether prices rose and whether that increase can be attributed to the merger may tell us something about the correctness of the decision in that transaction but not about decisions in other transactions more generally. The New Zealand Commerce Commission, as a result of this and the paucity of data that would allow for a difference-in-difference approach to ex post merger evaluation, has changed its approach. Rather than seeking to determine the veracity of a decision, the Commission seeks to determine whether anticipated market developments that were key to its decision, such as entry or increased imports, did in fact take place and if not, why not. This is done across a wide number of transactions with the goal of determining which techniques and types of evidence best serve its purpose so as to improve on them. This paper outlines this ex post methodology and presents learnings to date.

Date: 2017
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DOI: 10.1080/00779954.2017.1298661

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