Wednesday, August 6, 2008
Posted by D. Daniel Sokol
Thomas W. Hazlett, George Mason University - School of Law, has written an interesting article on Some Dynamics of High-Tech Merger Analysis in General and with Respect to XM-Sirius. I like the idea of using financial event studies.
ABSTRACT: Horizontal merger evaluation is heavily reliant on market definition. While a SSNIP framework formats the analysis, demand elasticity evidence used to apply the test is often sparse, as is often found in high-technology industries. This paper examines other sources of evidence that reveal the dynamics of market structure, data that are also probative in the evaluation of competitive effects. These sources include capital valuations of firms, financial event studies, and the public positions taken with respect to the merger by interested parties. Such evidence is examined in the XM-Sirius merger (2007-08), and shown - in two of the three instances - to be relatively informative in merger welfare analysis.