Optimal Pre-Merger Notification Mechanisms - Incentives and Efficiency of Mandatory and Voluntary Schemes

27 Pages Posted: 20 Apr 2016

See all articles by Aldo Gonzalez

Aldo Gonzalez

University of Chile - Department of Economics

Daniel Benitez

affiliation not provided to SSRN

Date Written: May 1, 2009

Abstract

The authors compare the two merger control systems currently employed worldwide: a mandatory system based on merger size threshold and a voluntary system with ex-post monitoring and fines. The voluntary system possesses two informational advantages: (i) the enforcement agency employs more information -verifiable and non verifiable parameters- to decide the set of mergers to investigate, and (ii) the first move of merging firms reveals useful information to the agency about the competitive risk of a merger. If fines for undue omission to notify are upward limited, then a mixed mechanism is optimal, where small transactions are under a voluntary regime while the big mergers are obliged to report. Remedies for fixing anticompetitive mergers act as an instrument that induces firms to notify the operation, improving further the advantage of the voluntary mechanism.

Keywords: Microfinance, Bankruptcy and Resolution of Financial Distress, Corporate Law, Economic Theory & Research, Small Scale Enterprise

Suggested Citation

Gonzalez, Aldo and Benitez, Daniel, Optimal Pre-Merger Notification Mechanisms - Incentives and Efficiency of Mandatory and Voluntary Schemes (May 1, 2009). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2009. Available at SSRN: https://ssrn.com/abstract=1407954

Aldo Gonzalez (Contact Author)

University of Chile - Department of Economics ( email )

Diagonal Paraguay 257
Torre 26, Of. 1801
Santiago
Chile

Daniel Benitez

affiliation not provided to SSRN ( email )

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