Success and failure of bargaining in merger control: The case of asset divestitures

Bertrand Chopard, Thomas Cortade and Andreea Cosnita-Langlais

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Abstract: This paper studies the bargaining over merger asset divestiture in the shadow of appeal litigation. We provide theoretical foundations for a recurrent empirical finding, namely that the opportunity cost born by the merging firms due to merger control has direct consequences for the remedy divestiture agreement. Increased severity of the appeal court improves the imperfect merger screening implemented by the agency through remedy negotiation, which possibly argues in favor of a judicial complement to the "regulatory" merger policy enforcement. But the main recommendation for agencies is to devise tools to better deal with the asymmetric information that limits the effectiveness of their merger policy enforcement.

Keywords: Merger control; Divestiture settlement; Asymmetric information (search for similar items in EconPapers)
Date: 2015
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Published in Economic Modelling, 2015, 49, pp.254-259. ⟨10.1016/j.econmod.2015.04.013⟩

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Journal Article: Success and failure of bargaining in merger control: The case of asset divestitures (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01738271

DOI: 10.1016/j.econmod.2015.04.013

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