Skip to main content
Log in

A Short Overview of a Methodology for the Ex-Post Review of Merger Control Decisions

  • Published:
De Economist Aims and scope Submit manuscript

Summary

This paper is based on a study commissioned by the European Commission, in which we proposed a detailed methodological approach for the ex-post assessment of decisions reached by the European Commission in the field of merger control. The methodology focuses on how to establish whether the market structure arising from the decision is apt to protect consumer welfare better than the market structures that could have arisen from alternative decisions. It provides suggestions on how assess the impact of the decision relative to the possible counterfactuals and discusses the empirical techniques that can be used to perform this evaluation.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Akerlof G. (1970) ‘The Market for ‘Lemons’: Qualitative Uncertainty and the Market Mechanism’. Quarterly Journal of Economics 89: 488–500

    Article  Google Scholar 

  • Aktas N., de Bodt E., Roll R. (2007) ‘European M&A Regulation is Protectionist’. The Economic Journal 117(522): 1096–1121

    Article  Google Scholar 

  • Bergeijk P.A.G., van en Kloosterhuis E. (2006) European Merger Simulation. Edward Elgar, Cheltenham

    Google Scholar 

  • Berry S.T. (1994) ‘Estimating Discrete-Choice Models of Product Differentiation’. Rand Journal of Economics 25: 242–262

    Article  Google Scholar 

  • Berry S., Levinson J., Pakes A. (1995) ‘Automobile Prices in Equilibrium’. Econometrica 60(4): 889–917

    Article  Google Scholar 

  • Besanko D., Spulber D.F. (1993) ‘Contested Mergers and Equilibrium Antitrust Policy’. Journal of Law, Economics, & Organization 9(1): 1–29

    Google Scholar 

  • Besley T., Case A. (2000) ‘Unnatural Experiments? Estimating the Incidence of Endogenous Policies’. Economic Journal 110: F672–F694

    Article  Google Scholar 

  • Buccirossi, P., L. Ciari, T. Duso, S.O. Fridolffson, G. Spagnolo, and C. Vitale (2006), ‘Ex-Post Review of Merger Control Decisions – A Study for the Commission Prepared by Lear – Laboratorio di economia, antitrust, regolamentazione’, available on http://ec.europa.eu/comm/competition/mergers/studies_reports/lear.pdf

  • Buccirossi, P., L. Ciari, T. Duso, G. Spagnolo, and C. Vitale (forthcoming), ‘A Study on the Effectiveness of Competition Policy,’ undertaken for the European Commission.

  • Campbell J., Lo A., MacKinlay A.C. (1997) The Econometrics of Financial Markets. Princeton University Press, Princeton

    Google Scholar 

  • Duso, T., K. Gugler, and B. Yurtoglu (2006), ‘How Effective is European Merger Control?’, WZB Discussion Paper, SP II 2006-12, Wissenschaftszentrum Berlin.

  • Duso T., Neven D., Röller L.H. (2007a) ‘The Political Economy of European Merger Control: Evidence Using Stock Market Data’. Journal of Law and Economics 50(3): 455–489

    Article  Google Scholar 

  • Duso, T., K. Gugler, and B. Yurtoglu (2007b), ‘EU Merger Remedies: An Empirical Assessment’, in: J. Stennek and V. Gosahl (eds.), The political economy of antitrust, contributions to economic analysis. North-Holland, pp. 302–348.

  • Eckbo B.E., Wier P. (1985) ‘Antimerger Policy Under the Hart-Scott-Rodino Act: A Re-examination of the Market Power Hypothesis’. Journal of Law and Economics 28: 119–149

    Article  Google Scholar 

  • Farrell, J. and C. Shapiro (1990), ‘Horizontal Mergers: An Equilibrium Analysis’, American Economic Review, March, pp. 107–126.

  • Fridolfsson S.O., Stennek J. (2001) ‘Should Mergers be Controlled?’. CEPR Discussion Paper, London

    Google Scholar 

  • Froeb L., Werden G. (1994) ‘The Effects of Mergers in Differentiated Products Industries: Logit Demand and Merger Policy’. Journal of Law, Economics and Organization 10: 407–426

    Google Scholar 

  • Goldberg P.K., Verboven F. (2001) ‘The Evolution of Price Dispersion in the European Car Market’. Review of Economic Studies 68(4): 811–848

    Article  Google Scholar 

  • Hahn J. (1998) ‘On the Role of the Propensity Score in Efficient Semiparametric Estimation of Average Treatment Effects’. Econometrica 66: 315–331

    Article  Google Scholar 

  • Hausman J., Leonard G. (1997) ‘Economic Analysis of Differentiated Product Mergers Using Real World Data’. George Mason Law Review 5(3): 321–346

    Google Scholar 

  • Hausman J., Leonard G., Zona J.D. (1994) ‘Competitive Analysis with Differentiated Products’. Annales d’Economie et de Statistique 34: 159–180

    Google Scholar 

  • Heckman J.J., Smith J.A. (1999) ‘The Pre-Program Earnings Dip and the Determinants of Participation in a Social Program: Implications for Simple Program Evaluation Strategies’. Economic Journal 109(457): 313–348

    Article  Google Scholar 

  • Ivaldi M., Verboven F. (2005) ‘Quantifying the Effects from Horizontal Mergers: The European Heavy Trucks Market’. International Journal of Industrial Organization 23(9–10): 669–691

    Article  Google Scholar 

  • Lande, R.H. (1989), ‘Chicago’s False Foundation: Wealth Transfers (Not Just Efficiency) Should Guide Antitrust’, Antitrust Law Journal, 58.

  • MacKinlay A.C. (1997) ‘Event Studies in Economics and Finance’. Journal of Economic Literature 35: 13–39

    Google Scholar 

  • Motta M. (2004) Competition Policy: Theory and Practice. Cambridge University Press, Cambridge

    Google Scholar 

  • Neven D., Röller L.-H. (2005) ‘Consumer Surplus vs. Welfare Standard in a Political Economy Model of Merger Control’. International Journal of Industrial Organization 23(9–10): 829–848

    Article  Google Scholar 

  • Nevo A. (2000) ‘Mergers with Differentiated Products: The Case of the Ready-to-Eat Cereal Industry’. The RAND Journal of Economics 31(3): 395–421

    Article  Google Scholar 

  • Nevo A. (2001) ‘Measuring Market Power in the Ready-to-Eat Cereal Industry’. Econometrica 69(2): 307–342

    Article  Google Scholar 

  • Peters C. (2003) ‘Evaluating the Performance of Merger Simulation: Evidence from the U.S. Airline Industry’, CSIO Woking Paper No. 0032. North-western University, Chicago

    Google Scholar 

  • Pinske J., Slade M. (2004) ‘Mergers, Brand Competition, and the Price of a Pint’. European Economic Review 48(3): 617–643

    Article  Google Scholar 

  • Pinske J., Slade M., Brett C. (2002) ‘Spatial Price Competition: A Semiparametric Approach’. Econometrica 70: 1111–1153

    Article  Google Scholar 

  • Polinsky, A.M. and S. Shavell (2000), ‘The Economic Theory of Public Enforcement of Law Stanford Law School’, John M. Olin Program in Law and Economics, Working Paper No. 159, Stanford.

  • PricewaterhouseCoopers (2005), ‘Ex Post Evaluation of Mergers’, A report prepared for the Office of Fair Trading, Department of Trade and Industry and the Competition Commission, London.

  • Reiss, P.C. and F.A Wolak (2007). ‘Structural econometric modelling: Rationales and examples from industrial organization’, in: J. J. Heckman and E. E. Leamer (eds.), Handbook of Econometrics, vol. 6, Elsevier Science, Amsterdam.

  • Renckens A. (2007) ‘Welfare Standards, Substantive Tests, and Efficiency Considerations in Merger Policy: Defining the Efficiency Defence’. Journal of Competition Law and Economics 3(2): 149–179

    Article  Google Scholar 

  • Roberts G.L., Salop S.C. (1996) ‘Efficiencies in Dynamic Merger Analysis’. World Competition 19(4): 5–17

    Google Scholar 

  • Rosenzweig M., Wolpin K. (2000) ‘Natural Experiments in Economics’. Journal of Economic Literature 38: 827–874

    Google Scholar 

  • Salop, S. (2005), ‘Question: What is the Real and Proper Antitrust Welfare Standard? Answer: The True Consumer Welfare Standard’, Statement before the Antitrust Modernization Commission, Washington D.C.

  • Slade M. (2004) ‘Market Power and Joint Dominance in U.K. Brewing’. Journal of Industrial Economics 70(1): 133–163

    Article  Google Scholar 

  • Sørgard, L. (2008), ‘Optimal Merger Policy’, mimeo

  • Stiglitz J.E. (1975) ‘The Theory of “Screening,” Education, and the Distribution of Income’. American Economic Review 65(3): 283–300

    Google Scholar 

  • Stiglitz J.E. (1979) ‘Equilibrium in Product Markets with Imperfect Information’. American Economic Review 69(2): 339–345

    Google Scholar 

  • Stiglitz J.E., Grossman S.J. (1976) ‘Information and Competitive Price Systems’. American Economic Review 66(2): 246–253

    Google Scholar 

  • Vita M. (2000) ‘Regulatory Restrictions on Vertical Integration and Control: The Competitive Impact of Gasoline Divorcement Policies’. Journal of Regulatory Economics 18: 217–233

    Article  Google Scholar 

  • Werden G. (1997) ‘Simulating the Effects of Differentiated Products Mergers: A Practitioners’ Guide’. In: Julie A.C., Cotterill R.W.(eds) Strategy and policy in the food system: Emerging issues, Proceedings of NE-165 Conference, 20 June 1996. University of Massachusetts, Amherst, pp 95–110

    Google Scholar 

  • White, H. 2005, ‘Estimating the Effects of Natural Experiments’, mimeo.

  • Williamson O.E. (1968) ‘Economies as an Antitrust Defense: The Welfare Tradeoffs’. American Economic Review 58(1): 18–36

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Paolo Buccirossi.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Buccirossi, P., Ciari, L., Duso, T. et al. A Short Overview of a Methodology for the Ex-Post Review of Merger Control Decisions. De Economist 156, 453–475 (2008). https://doi.org/10.1007/s10645-008-9104-3

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10645-008-9104-3

Keywords

Navigation