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Passive partial ownership, sneaky takeover, and merger control

Dragan Jovanovic and Christian Wey

No 102, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: We analyze horizontal mergers when the acquirer holds a passive partial ownership stake (PPO) in the target firm prior to the merger. We show that a PPO reduces the minimal synergy level necessary to make a merger beneficial for consumers. It follows that an antitrust authority ignoring existing PPOs when evaluating merger proposals (which reflects the current EU merger control regime) invites sneaky takeovers: Acquiring firms strategically use PPOs prior to a full merger proposal to get mergers approved which are, in fact, detrimental to consumers.

Keywords: Horizontal Mergers; (Passive) Partial Ownership; Antitrust; Synergies; Sneaky Takeovers (search for similar items in EconPapers)
JEL-codes: D43 K21 L13 L41 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-bec and nep-com
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Journal Article: Passive partial ownership, sneaky takeovers, and merger control (2014) Downloads
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