Difference-in-Differences as a Tool for Ex-Post Analysis of Mergers: The Case of a Merger in the Romanian Retail Market

Radu A. Păun () and Danusia Vamvu ()
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Radu A. Păun: The Romanian Competition Council
Danusia Vamvu: The Romanian Competition Council

A chapter in Competition Authorities in South Eastern Europe, 2018, pp 209-222 from Springer

Abstract: Abstract In this paper we present the difference-in-differences methodology implemented by the Romanian Competition Council in the second half of 2013. The analysis was conducted to evaluate the ex-post impact of a merger in the Romanian retail market, authorised by the competition authority in November 2010. In the merger review process, we identified five potentially problematic locations (the treatment group), and selected accordingly representative time intervals and product categories (11). We also defined a suitable group of other stores (the control group) to be used as a benchmark in our analysis. The implementation of the difference-in-differences technique through regression analysis rendered 55 case estimates, of which 49 match the departing hypotheses and are thus considered reliable. In each of these cases we estimated the percentage change in the price of a product category in a given store, due to merger clearance. Our results indicate that the approved merger has not led to general price increases: in 36 of 49 cases the merger impact on prices is not statistically significantly different from zero and only three of the 49 cases show price increases. Moreover, there are significantly more situations where the prices for certain product category-store combinations decreased following the merger (ten such cases). Consequently, it appears that the Romanian Competition Council’s decision to clear the merger in November 2010 was the right approach.

Keywords: Ex-post analysis; Horizontal mergers; Difference-in-differences; Antitrust economics; Merger control (search for similar items in EconPapers)
JEL-codes: K21 L44 L51 L81 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-319-76644-7_12

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DOI: 10.1007/978-3-319-76644-7_12

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