Merger Performance and Efficiencies in Horizontal Merger Policy in the US and the EU

Sjoerd Kamerbeek ()

MPRA Paper from University Library of Munich, Germany

Abstract: In current horizontal merger policy in the US and the EU an explicit efficiency defense is allowed. On both sides of the Atlantic mergers are unconditionally approved if internal efficiencies are sufficient to reverse the mergers’ potential to harm consumers in the relevant market. Current merger policy is implicitly based on the assumption that rational managers will only propose privately profitable mergers. In this thesis I will show that the empirical evidence on merger performance suggests that this assumption can’t be sustained. Managers do propose uneconomic mergers, motivated by non-wealth maximizing behavior. To tackle this problem I argue that efficiencies should not only be used as an efficiency defense, but efficiencies should work both ways. To avoid type I and type II errors the competition authorities in the US and the EU should undertake a sequential efficiency test in their assessment of specific mergers.

Keywords: Merger; competition policy; efficiencies; efficiency defence; merger performance; rational manager (search for similar items in EconPapers)
JEL-codes: K0 K21 L4 (search for similar items in EconPapers)
Date: 2009-07-01
New Economics Papers: this item is included in nep-bec, nep-com, nep-eff, nep-ind and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18064

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