Assessing the Efficacy of Structural Merger Remedies: Choosing Between Theories of Harm?

Stephen Davies and Matthew Olczak
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Stephen Davies: Centre for Competition Policy and School of Economics, University of East Anglia
Matthew Olczak: Centre for Competition Policy and School of Economics, University of East Anglia

No 2008-28, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: Previous empirical assessments of the effectiveness of structural merger remedies have focused mainly on the subsequent viability of the divested assets. Here, we take a different approach by examining how competitive are the market structures which result from the divestments. We employ a tightly specified sample of markets in which the European Commission (EC) has imposed structural merger remedies. It has two key features: (i) it includes all mergers in which the EC appears to have seriously considered, simultaneously, the possibility of collective dominance, as well as single dominance; (ii) in a previous paper, for the same sample, we estimated a model which proved very successful in predicting the Commission's merger decisions, in terms of the market shares of the leading firms. The former allows us to explore the choices between alternative theories of harm, and the latter provides a yardstick for evaluating whether markets are competitive or not – at least in the eyes of the Commission.

Keywords: tacit collusion; collective dominance; single dominance; coordinated effects; merger remedies (search for similar items in EconPapers)
JEL-codes: L13 L41 (search for similar items in EconPapers)
Date: 2008-08-01
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Citations: View citations in EconPapers (2)

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