Working Paper: CEPR ID: DP9536
Authors: Duarte Brito; Ricardo Ribeiro; Helder Vasconcelos
Abstract: The growth of private-equity investment strategies in which firms often hold partial ownership interests in competing firms has led competition agencies to take an increased interest in assessing the competitive effects of partial horizontal acquisitions. We propose a methodology to evaluate the coordinated effects of such acquisitions in differentiated products industries. The acquisitions may be direct and indirect, and may or not correspond to control. The methodology, that nests full mergers, evaluates the impact on the range of discount factors for which coordination can be sustained. We provide an empirical application to several acquisitions in the wet shaving industry.
Keywords: antitrust; coordinated effects; demand estimation; differentiated products; oligopoly; partial acquisitions
JEL Codes: C54; D12; L13; L41; L66
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| partial ownership (J54) | facilitate coordination (F42) |
| facilitate coordination (F42) | reduce incentives for deviation (D43) |
| partial ownership interests (G32) | likelihood of coordination (D70) |
| shape of demand function (C69) | likelihood of coordination (D70) |
| partial ownership interests (G32) | promote coordination (P41) |
| partial ownership interests (G32) | hinder coordination (P11) |
| partial acquisitions (G34) | critical thresholds of discount factors (H43) |
| critical thresholds of discount factors (H43) | sustaining coordination (E61) |
| partial acquisitions (G34) | competitive behavior (L13) |