Thursday, November 24, 2016

Does Merger Policy Converge after the 2004 European Union Reforms

Mats Bergman, Sodertorn University, Stockholm, Malcolm B. Coate, U.S. Federal Trade Commission (FTC), Anh T. V. Mai, Sodertorn University (University College of Southern Stockholm), and Shawn W. Ulrick, U.S. Federal Trade Commission (FTC) ask Does Merger Policy Converge after the 2004 European Union Reforms.

ABSTRACT: With almost ten years of experience with the reformed European merger policy, sufficient data has been accumulated to explore the impact of the reform on the difference between the European Union (EU) and the United States (US) merger policy. We expect the EU 2004 reform that established a “significant impediment to effective competition” standard close to the US “substantial lessening of competition” standard would lead to some convergence. We start by identifying changes in the EU regime and verifying the consistency in the US regime. We detect a weaker EU policy for clear dominance and monopoly cases and some changes in its collusion policy after the reform. The incidence of collusion cases falls while EU’s policy, conditional on collusion being the theory of harm, appears stronger. Limited data precludes detailed analysis for the non-dominance unilateral concerns, although the EU data implies stability in the challenge probability associated with that type of case. The US results remain stable over time. Decompositions show some convergence in policy for unilateral cases and non-parametric analysis shows further convergence occurs in unilateral effects analysis. Matching analysis is attempted, but fails to generate any results, because even adjusted, the two sample distributions are not sufficiently balanced, so we must rely on the structural form assumptions of our logit models.

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