Passive partial ownership, sneaky takeover, and merger control
Dragan Jovanovic and
Christian Wey ()
No 102, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
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)
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Journal Article: Passive partial ownership, sneaky takeovers, and merger control (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:102
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