The Impact of Horizontal Mergers on Rivals PDF Download

Author: Joseph A. Clougherty
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 46

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Book Description

Author:
Publisher:
ISBN:
Category :
Languages : en
Pages : 47

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Book Description
We study how operating efficiencies in horizontal mergers affect market reactions of merging firms' rivals, customers, and suppliers. We measure operating efficiency gains using projections disclosed by merging firms' insiders. Higher efficiency gains are associated with lower announcement returns to merging firms' rivals (due to increased equilibrium output of merging firms), higher returns to their customers (due to lower equilibrium price of merging firms' output), and higher returns to their suppliers (due to the merged firm's higher equilibrium demand for inputs). Our results suggest that the pass-through of efficiency gains along merging firms' supply chains is as important as the effects of post-merger changes in market power.

Author: Michael Alvin Salinger
Publisher:
ISBN:
Category : Consolidation and merger of corporations
Languages : en
Pages : 33

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Book Description

Author: Daniel Gore
Publisher: Cambridge University Press
ISBN: 1107007720
Category : Business & Economics
Languages : en
Pages : 559

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Book Description
Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.

Author: Joseph A. Clougherty
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 0

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Book Description

Author: Douglas J. Fairhurst
Publisher:
ISBN:
Category :
Languages : en
Pages : 53

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Book Description
We explore the sources of gains in horizontal mergers by exploiting heterogeneity between the merging firms' geographic footprints. We calculate the geographic overlap between the bidder, target, and their rivals and customers to identify variation in the competitive impact of horizontal mergers. We document significantly positive rival reactions and negative customer reactions when the bidder and target operate in similar geographic regions, consistent with anticompetitive effects in these deals. We also exploit staggered changes in the political affiliation of state Attorneys General (AGs) to identify variation in local antitrust enforcement. We show that bidders avoid concentrating mergers when they operate in a high proportion of states with Democratic AGs, and Democratic AGs moderate the effects of concentrating mergers on local rivals and customers. Our evidence supports the argument that geographically-concentrating horizontal mergers are more likely to be anticompetitive. We also document a significant role of state-level AGs in the M&A regulatory process.

Author: Gregory J. Werden
Publisher:
ISBN:
Category :
Languages : en
Pages : 15

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Book Description
Horizontal mergers give rise to unilateral anticompetitive effects if they cause the merged firm to act less intensely competitive than the merging firms, while non-merging rivals do not alter their competitive strategies. This chapter describes the economic theory underlying unilateral competitive effects from mergers when prices are set through an auction or bargaining process. In the auction context, this chapter also describes the quantitative application of this theory in predicting the unilateral price effects of proposed mergers.

Author: Duarte Brito
Publisher: Kluwer Law International B.V.
ISBN: 9041124519
Category : Business & Economics
Languages : en
Pages : 248

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Book Description
Drawing on twenty years of merger analysis literature, this single source offers practical solutions to a wide range of problems faced by specialists working in the field of mergers and acquisitions. The authors take an industrial organization approach in which effects on profits, on consumer surplus and on overall welfare are of greatest relevance. The focus is primarily on horizontal mergers, although vertical and conglomerate mergers are addressed when producers of complementary goods are involved. Among the issues and elements examined, the authors provide answers to the following: How does a merger affect the insider firm's profitabifity? Why may outsiders stock market value increase or decrease following a merger? What are the expected welfare effects of a merger? What sort of arguments can be used for merger defense? How do economists model the firm's merging decision? How can the authorities simulate the price effects of a horizontal merger? Is post-merger entry likely to compensate the effects of a merger? The discussion proceeds from an analysis of the simplest exercise of market power to evermore complex merger environments. In their detailed coverage of policy evaluation of proposed acquisitions, the authors provide a merger simulation toolkit which can be applied to important recent judicial decisions in the field. This book will be of great value not only to academics in microeconomics and industrial organization, but also to lawyers and officials seeking expert practical guidance in the business or administrative responsibilities surrounding mergers and acquisitions.

Author: Daniel Gore
Publisher: Cambridge University Press
ISBN: 110735482X
Category : Law
Languages : en
Pages : 559

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Book Description
This concise and practical guide to the most important economic techniques and evidence employed in modern merger control draws on the authors' extensive experience in advising on European merger cases. It offers an introduction to the relevant economic concepts and analytical tools, and stand-alone chapters provide an in-depth overview of the theoretical and practical issues related to market definition, unilateral effects, coordinated effects and non-horizontal mergers. Each form of economic evidence and analysis is illustrated with practical examples and an overview of key merger decisions.

Author: Dongxu Li (Ph. D. in business administration)
Publisher:
ISBN:
Category : Consolidation and merger of corporations
Languages : en
Pages : 216

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Book Description
This paper examines the net effect of horizontal mergers on competition by testing industry rivals’ investments. The efficiency hypothesis predicts that horizontal mergers with sufficient efficiency gains motivate rivals to invest in cost-saving projects to match the merging firms’ higher operating efficiencies. Using a large sample of U.S. horizontal mergers from 1984 to 2016, I find that following a horizontal merger, rivals’ PP&E investment decreases by 11%, labor investment decreases by 11% while R&D and advertising expenditures increase by 2% and 8% respectively relative to the median. The effects do not exist for rivals exposed to withdrawn horizontal mergers. Segment-level tests show that rivals shift from PP&E and labor investments to R&D investment. On the firm-level, the shift to advertising is greater for less innovative firms. Firms with larger investment shifts decrease operating cost ratios more. Moreover, R&D investment by a segment becomes negatively related to the other segments’ Tobin’s Q, which implies improved efficiency of internal capital markets. Overall, these results are consistent with the efficiency hypothesis.