Antitrust & Competition Policy Blog

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

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Monday, February 14, 2011

Efficiency Gains and Structural Remedies in Merger Control

Posted by D. Daniel Sokol

Helder Vasconcelos, University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) and Department of Economics, Centre for Economic Policy Research (CEPR) analyzes Efficiency Gains and Structural Remedies in Merger Control.

ABSTRACT: This paper studies the role of structural remedies in merger control in a Cournot setting where (endogenous) mergers are motivated by prospective efficiency gains and must be submitted to an Antitrust Authority (AA) which might require partial divestiture for approval. From a merger policy perspective, this paper's main contribution is two-fold. First, it shows that if mergers do not involve all firms in the industry, then merger remedies help the AA to increase consumer surplus only if assets are divested to competitors already in the market. Second, it presents a model which clarifies that there can only exist social costs to over-fixing the anticompetitive effects of a merger if merger review policy treats mergers as one-time events. When a more dynamic view is taken of sequential merger review, then there can never be an over-fixing problem. In this case, however, remedies are shown to be needed to make myopic merger review optimal.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/02/efficiency-gains-and-structural-remedies-in-merger-control.html

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