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The Deterrence Effects of U.S. Merger Policy Instruments

39 Pages Posted: 20 Jul 2011  

Joseph A. Clougherty

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

Jo Seldeslachts

University of Amsterdam; Tinbergen Institute

Multiple version iconThere are 4 versions of this paper

Date Written: July 2011


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.

Keywords: antitrust, deterrence, merger policy

JEL Classification: K21, L40, L49

Suggested Citation

Clougherty , Joseph A. and Seldeslachts, Jo, The Deterrence Effects of U.S. Merger Policy Instruments (July 2011). CEPR Discussion Paper No. DP8482. Available at SSRN: https://ssrn.com/abstract=1890005

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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