Merger Review: How Much of Industry is Affected in an International Perspective?

  • Jan De Loecker
  • Jozef Konings
  • Patrick Van Cayseele
Article

Abstract

The paper develops a methodological framework for quantifying the impact of merger control regulations. While most countries have different criteria in terms of sales, market shares or combinations of the above, and while listing an inventory of these criteria is easy, such an exercise does not provide an answer regarding their impact on the market for corporate control. A methodology is developed to compare empirically the percentage of firms affected in an industry in a country by the “clearing in advance” regulation. By comparing industries and countries, we are able to provide an indication of the impact of merger regulations for a large number of industries in Europe. As such we provide a first indication of the tightness of ex ante merger review.

Keywords

merger control firm size distribution 

JEL Classifications

K21 L40 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Baker, J.B., “The case for antitrust enforcement,” Journal of Economic Perspectives, vol. 17(4), pp. 27–50, 2003.CrossRefGoogle Scholar
  2. Barros, P.P., Clougherty, J. and Seldeslachts, J., Remedy for Now but Prevent for Tomorrow: The Deterence Effects of Merger Policy Tools. WZB mimeo, 2006.Google Scholar
  3. Bernheim, D. and Whinston, M., “Multimarket contact and collusive behavior,” Rand Journal of Economics, vol. 21, pp. 1–26, 1990.CrossRefGoogle Scholar
  4. Bittlingmayer, G., “Did antitrust policy cause the great merger wave?,” Journal of Law and Economics, vol. 28, pp. 77–118, 1985.CrossRefGoogle Scholar
  5. Brakman, S., Garretsen, H. and Van Marrewijk, C., Comparative Advantage, Cross Border Mergers and Merger Waves: International Economics Meets Industrial Organization. CESifo Forum 1/2006, pp. 22–26, 2006.Google Scholar
  6. Checchi, D., Navaretti, G. and Turrini, A., “Adjusting labour demand: Multinational versus national firms–A cross-European analysis,” The Journal of the European Economic Association, vol. 1 (2-3), 2003.Google Scholar
  7. Crandall, B.W. and Winston, C., “Does antitrust policy improve consumer welfare? Assessing the Evidence,” Journal of Economic Perspectives, vol. 17(4), pp. 3–26, 2003.CrossRefGoogle Scholar
  8. Duso, T., Neven, D. and Röller, L., The Political Economy of European Merger Control: Evidence Using Stock Market Data. CEPR Discussion Papers 3880, 2003.Google Scholar
  9. Eeckhout, J., “Gibrat’s law for (all) cities,” American Economic Review, vol. 94(5), pp. 1429–1451, 2004.CrossRefGoogle Scholar
  10. Hinloopen, J. and Van Marrewijk, C., Comparative Advantage, the Rank-Size Rule and Zipf’s law. Tinbergen Institute Discussion Paper 2006-100/1, 2006.Google Scholar
  11. Katsoulacos, Y., “Rethinking merger control policy,” in E.U. Competition Law and Policy, Development & Priorities, Athens, pp. 29–44, 2002.Google Scholar
  12. Konings, J., Van Cayseele, P. and Warzynski, F., “The dynamics of industrial mark-ups in two small open economies: Does national competition policy matter?,” International Journal of Industrial Organization, vol. 19, pp. 841–859, 2001.CrossRefGoogle Scholar
  13. Konings, J., Van Cayseele, P. and Warzynski, F., “The Effect of privatization and competitive pressure on firms’s price-cost margins,” The Review of Economics and Statistics, vol. 87(1), pp. 124–134, 2005.CrossRefGoogle Scholar
  14. Konkurrensverket, Fighting Cartels, Why and How?, Stockholm 2001.Google Scholar
  15. Merger Control, Merger Control in 47 Jurisdictions Worldwide, (www.global-competition.com) 2002.
  16. Neary, P., “Globalization and market structure,” Journal of the European Economic Association, vol. 1(2–3), (April–May), pp. 245–271, 2003.CrossRefGoogle Scholar
  17. Office of Fair Trading, The development of targets for consumer savings arising from competition policy, (London), p. 166, 2002.Google Scholar
  18. PWC, A tax on mergers? Surveying the time and costs to business of multi-jurisdictional merger reviews. A study commissioned by the International Bar Association and the American Bar Association, 2003.Google Scholar
  19. Smets, H. and Van Cayseele, P., “Competing merger policies in a common agency framework,” International Review of Law and Economics, vol. 15, pp. 425–441, 1995.CrossRefGoogle Scholar
  20. Sutton J., Technology and Market Structure, p. 676. MIT: Cambridge, MA, 1998.Google Scholar
  21. Van Cayseele, P., Sabbatini, P.L. and Van Meerbeeck, W., “National competition policies, chap. 4,” in: Galli G. and J. Pelckmans (eds.), Regulatory Reform and Competitiveness in Europe, Horizontal Issues. Cheltenham and Northampton, MA, (Edward Elgar), p. 544, 2000.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • Jan De Loecker
    • 1
  • Jozef Konings
    • 2
    • 3
  • Patrick Van Cayseele
    • 2
    • 3
    • 4
    • 5
  1. 1.Economics Department, Stern School of BusinessNew York UniversityNew YorkUSA
  2. 2.Department of EconomicsK.U. LeuvenLeuvenBelgium
  3. 3.LICOSLeuvenBelgium
  4. 4.Faculty of Economics and EconometricsUniversiteit van AmsterdamAmsterdamThe Netherlands
  5. 5.LeuvenBelgium

Personalised recommendations