Threatening to Buy: Private Equity Buyouts and Antitrust Policy

Pehr-Johan Norbäck, Lars Persson and Joacim Tåg

No 1199, Working Paper Series from Research Institute of Industrial Economics

Abstract: Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise mergerstable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable – but consumer surplus-enhancing – mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.

Keywords: Antitrust policy; Mergers and acquisitions; Private equity; Temporary ownership (search for similar items in EconPapers)
JEL-codes: G32 G34 L13 L22 L40 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2018-02-06
New Economics Papers: this item is included in nep-cfn, nep-com and nep-ind
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Citations: View citations in EconPapers (3)

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Journal Article: Threatening to buy: Private equity buyouts and antitrust policy (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1199

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