Antitrust & Competition Policy Blog

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

Monday, August 6, 2018

Threatening to Buy: Private Equity Buyouts and Antitrust Policy

Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)) ; Persson, Lars (Research Institute of Industrial Economics (IFN)); and Tåg, Joacim (Research Institute of Industrial Economics (IFN)) explore Threatening to Buy: Private Equity Buyouts and Antitrust Policy.

ABSTRACT:  Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise mergerstable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable – but consumer surplus-enhancing – mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.

http://lawprofessors.typepad.com/antitrustprof_blog/2018/08/threatening-to-buy-private-equity-buyouts-and-antitrust-policy.html

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