Safe Harbours in Merger Guidelines: What Should They Be?

23 Pages Posted: 2 Mar 2011  

Qing Gong Yang

affiliation not provided to SSRN

Michael Pickford

affiliation not provided to SSRN

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Abstract

Safe harbours in merger guidelines define post-merger market concentration or concentration change thresholds below which proposed mergers are unlikely to be anti-competitive; anti-competitiveness is usually measured as a substantial lessening of competition. Yet competition agencies have different safe harbours. We used merger models to run many simulations involving a wide range of market structures and merger-induced aggregations. The post-merger unilateral price increases in these scenarios were used to gauge what the safe harbours should be to keep price increases below a specified threshold. The safe harbour thresholds commonly used were found typically to be too restrictive, in that they failed to screen out mergers that were almost certainly competitively benign.

Suggested Citation

Yang, Qing Gong and Pickford, Michael, Safe Harbours in Merger Guidelines: What Should They Be?. Australian Economic Review, Vol. 44, No. 1, pp. 13-35, 2011. Available at SSRN: https://ssrn.com/abstract=1774333 or http://dx.doi.org/10.1111/j.1467-8462.2010.00617.x

Qing Gong Yang

affiliation not provided to SSRN

Michael Pickford

affiliation not provided to SSRN ( email )

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