Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Saturday, April 7, 2007

Bargaining Over Remedies in Merger Regulation

Posted by D. Daniel Sokol

Merger remedies are a critical issue in any given jurisdiction, yet one that is underplayed in the academic literature.  Adding to the literature on EU merger remedies is a working paper by Bruce Lyons and Andrei Medvedev of the Competition Centre of the University of East Anglia entitled Bargaining Over Remedies in Merger Regulation.

ABSTRACT: This paper provides a first attempt to understand how outcomes are determined by the standard institutions of merger control. In particular, we focus on the internationally standard 2-phase investigation structure and remedy negotiations of the form practiced by the EC. We find that there are inherent biases in remedy outcomes, and identifiable circumstances where offers will be excessive and where they will be deficient. In particular, we find clear circumstances in which firms offer excessive remedies, which goes against a possible intuition that firms should expect to extract an information rent for possessing superior information about competition in the market.

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