Market Reactions to European Merger Regulation: A Reexamination of the Protectionism Hypothesis
WHU - Otto Beisheim School of Management
Eric De Bodt
Université Lille Nord de France - SKEMA Business School
Univ. Lille Nord de France - SKEMA Business School
California Institute of Technology
November 15, 2011
In the 1990s, European merger regulation (EMR) was biased against foreign acquirers, especially if the deal harmed domestic rivals (i.e., protectionism). In 2002, the Court of First Instance overturned three prohibitions by the European Commission (EC) and criticized its economic analysis. These events hastened EMR reform, including amendments introduced in May 2004. With a sample of 474 merger proposals submitted to the EC during 1990–2007, we show that the EC’s protectionism from the 1990s did not extend into more recent periods. The change of policy toward foreign acquirers seems rooted in Court judgments of 2002 and subsequent regulatory reforms.
Number of Pages in PDF File: 36
Keywords: mergers and acquistions, regulation, protectionism
JEL Classification: G34, G38
Date posted: November 18, 2011
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