The Deterrence Effects of U.S. Merger Policy Instruments

39 Pages Posted: 22 Jul 2009

See all articles by Joseph A. Clougherty

Joseph A. Clougherty

University of Illinois at Urbana-Champaign

Jo Seldeslachts

KU Leuven - Faculty of Business and Economics (FEB); German Institute for Economic Research (DIW Berlin)

Multiple version iconThere are 4 versions of this paper

Date Written: June 22, 2009

Abstract

We estimate the deterrence effects of U.S. merger policy instruments with respect to the composition and frequency of future merger notifications. Data from the Annual Reports by the U.S. DOJ and FTC allow industry based measures over the 1986-1999 period of the conditional probabilities for eliciting an investigation, challenge, and prohibition: deterrence variables akin to the traditional conditional probabilities from the economics of crime literature. We find the challenge-rate, and to a lesser degree the investigation-rate, to lead to fewer horizontal mergers in subsequent years; however, the prohibition-rate does not indicate significant deterrence effects. These results suggest that investigations and challenges respectively yield moderate and strong deterrence effects; yet, prohibitions do not involve significantly more deterrence than do remedies.

Keywords: deterrence, antitrust, merger policy, methodology

JEL Classification: L40, L49, K21

Suggested Citation

Clougherty, Joseph A. and Seldeslachts, Jo, The Deterrence Effects of U.S. Merger Policy Instruments (June 22, 2009). Available at SSRN: https://ssrn.com/abstract=1437648 or http://dx.doi.org/10.2139/ssrn.1437648

Joseph A. Clougherty (Contact Author)

University of Illinois at Urbana-Champaign ( email )

1206 S. Sixth Street
330 Wohlers Hall, MC-706
Champaign, IL 61820
United States

Jo Seldeslachts

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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