Working Paper: CEPR ID: DP3880
Authors: Tomaso Duso; Damien J. Neven; Larshendrik Röller
Abstract: The objective of this Paper is to investigate the determinants of EU merger control decisions. We consider a sample of 164 EU merger control decisions and evaluate the anti-competitive consequences of these mergers from the reaction of the stock market price of competitors to the merging firms. We then account for the discrepancies between the actual decisions and what the stock market would have dictated in terms of the political economy surrounding the cases. Our results suggest that the commission?s decisions cannot be solely accounted for by the motive of protecting consumer surplus. The institutional and political environment does matter. As far as firms? influence is concerned, however, our data suggests that the commission?s decisions are not sensitive to firms? interests. Instead, the evidence suggests that other factors ? such as country and industry effects, as well as market definition and procedural aspects ? do play significant roles.
Keywords: mergers; political economy
JEL Codes: K20; L10; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| EU merger commission decisions (L49) | market perception of competitiveness (L11) |
| EU merger commission prohibitions (K21) | stock market perception of competitiveness (G10) |
| EU merger commission decisions (L49) | type I errors (C20) |
| EU merger commission decisions (L49) | type II errors (C52) |
| EU merger commission decisions (L49) | institutional and political factors (P16) |
| institutional and political factors (P16) | EU merger commission decisions (L49) |
| procedural aspects (K40) | EU merger commission decisions (L49) |