Working Paper: CEPR ID: DP14548
Authors: Tomaso Duso; Pauline Affeldt; Florian Szcs
Abstract: We study the evolution of EC merger decisions over the first 25 years of common European mergerpolicy. Using a novel dataset at the level of the relevant antitrust markets and containing all merger casesscrutinized by the Commission over the 1990-2014 period, we evaluate how consistently arguments related tostructural market parameters – dominance, concentration, barriers to entry, and foreclosure – were appliedover time and across different dimensions such as the geographic market definition and the complexity ofthe merger. Simple, linear probability models as usually applied in the literature overestimate on averagethe effects of the structural indicators. Using non-parametric machine learning techniques, we find thatdominance is positively correlated with competitive concerns, especially in concentrated markets and incomplex mergers. Yet, its importance has decreased over time and significantly following the 2004 mergerpolicy reform. The Commission’s competitive concerns are also correlated with concentration and the moreso, the higher the entry barriers and the risks of foreclosure. These patterns are not changing over time.The role of the structural indicators in explaining competitive concerns does not change depending on thegeographic market definition.
Keywords: merger policy; EU Commission; dominance; concentration; entry barriers; foreclosure; causal forests
JEL Codes: K21; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Dominance (C72) | Competitive Concerns (L13) |
| Concentration Measures (D30) | Commission's Competitive Concerns (L43) |
| Geographic Market Definition (R12) | Role of Structural Indicators (L16) |
| Complexity of Mergers (C78) | Competitive Concerns (L13) |