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The Deterrence Effects of U.S. Merger Policy Instruments

Joseph A. Clougherty

University of Illinois at Urbana-Champaign; Centre for Economic Policy Research (CEPR)

Jo Seldeslachts

University of Amsterdam; Tinbergen Institute

July 4, 2011

Tinbergen Institute Discussion Paper 11-095/1

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 investigations, challenges, prohibitions, court-wins and court-losses: deterrence variables akin to the traditional conditional probabilities from the economics of crime literature. We find the challenge-rate to robustly deter future horizontal (both relative and absolute) merger activity; the investigation-rate to slightly deter relative horizontal merger activity; the court-loss-rate to moderately affect absolute-horizontal merger activity; and the prohibition-rate and court-win-rate to not significantly deter future horizontal mergers. Accordingly, the conditional probability of eliciting an antitrust challenge (i.e., remedies and prohibitions) involves the strongest deterrence effect from amongst the different merger policy instruments.

Number of Pages in PDF File: 44

Keywords: antitrust, deterrence, merger policy

JEL Classification: L40, L49, K21

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Date posted: July 18, 2011  

Suggested Citation

Clougherty , Joseph A. and Seldeslachts, Jo, The Deterrence Effects of U.S. Merger Policy Instruments (July 4, 2011). Tinbergen Institute Discussion Paper 11-095/1. Available at SSRN: https://ssrn.com/abstract=1888168 or http://dx.doi.org/10.2139/ssrn.1888168

Contact Information

Joseph A. Clougherty (Contact Author)
University of Illinois at Urbana-Champaign ( email )
1206 S. Sixth Street
350 Wohlers Hall, MC-706
Champaign, IL 61820
United States
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Jo Seldeslachts
University of Amsterdam ( email )
Spui 21
Amsterdam, 1018 WB
Tinbergen Institute ( email )
Burg. Oudlaan 50
Rotterdam, 3062 PA
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