Unilateral Effects Screens for Partial Horizontal Acquisitions: The Generalized HHI and GUPPI

Duarte Brito, António Osório, Ricardo Ribeiro and Helder Vasconcelos

No 2, Working Papers de Economia (Economics Working Papers) from Católica Porto Business School, Universidade Católica Portuguesa

Abstract: Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive effects of partial acquisitions. We propose a generalization to a partial horizontal acquisition setting of the two most traditional indicators used to screen unilateral anti-competitive effects: the Herfindahl-Hirschman Index and the Gross Upward Price Pressure Index. The proposed generalized indicators can deal with all types of acquisitions that may lessen competition in the industry: acquisitions by owners that are internal to the industry (rival firms) and engage in cross-ownership, as well as acquisitions by owners that are external to the industry and engage in common-ownership. Furthermore, these indicators can deal with direct and indirect acquisitions, which may or may not correspond to control, and nest full mergers as a special case. We provide an empirical application to several acquisitions in the wet shaving industry. The results seem to suggest that (i) a full merger induces higher unilateral anti-competitive effects than a partial controlling acquisition involving the same firms, (ii) a partial controlling acquisition induces higher unilateral anti-competitive effects than a partial non-controlling acquisition involving the same firms and the same financial stakes, and (iii) an acquisition by owners that are internal to the industry induces higher unilateral anti-competitive effects than an acquisition (involving the same firms and the same stakes) by external owners that participate in more than one competitor firm.

Keywords: Antitrust; Partial Horizontal Acquisitions; Oligopoly; Screening Indicators; HHI; GUPPI (search for similar items in EconPapers)
JEL-codes: L13 L41 L66 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2015-07
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (7)

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Journal Article: Unilateral effects screens for partial horizontal acquisitions: The generalized HHI and GUPPI (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cap:wpaper:022015

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