Thursday, November 13, 2008
Posted by D. Daniel Sokol
Aldo Gonzalez (University of Chile - Department of Economics) and Daniel Benitez (World Bank) have a new paper on Pre-merger Notification Mechanisms: Incentives and Efficiency of Mandatory and Voluntary Schemes.
ABSTRACT: We compare the two current merger control mechanisms employed worldwide: The mandatory system contingent on the merger size and the voluntary with ex-post monitoring. On the basis of the existing literature and our own work, we conclude that the voluntary system has two main advantages compared to the mandatory regime: (i) It allows the competition agency to discretionally select the mergers to investigate. (ii) It employs fewer resources in controlling a given set of mergers due to the ex-post monitoring action. The superiority of the voluntary system relies on the ability of the antitrust system to apply penalties for unlawful omission to notify and to promptly react to stop the consummation of likely anticompetitive mergers. These conditions may not be satisfied in economies with weak enforcement of law or with insufficient experience in antitrust supervision.