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Does Merger Control Work? A Retrospective on U.S. Enforcement Actions and Merger Outcomes

John E. Kwoka, Jr.

Northeastern University - Department of Economics

April 4, 2012

Antitrust Law Journal , Vol. 78, 2013

The accuracy and efficacy of merger control are important questions that have long posed challenges for policy evaluation. The growing number of merger retrospectives provide an opportunity to conduct such an analysis since they measure the outcomes of actual mergers. This paper compiles all available merger retrospectives that meet scholarly criteria, resulting in 48 mergers with measured price outcomes. It supplements this data base with information about the actions taken by U.S. antitrust agencies with respect to those particular mergers - whether they were cleared, or approved with remedies, or opposed. If remedies were imposed, conduct remedies are distinguished from structural remedies, since many observers view the latter as more likely effective. We find that the antitrust agencies cleared the studied mergers about as often as they imposed remedies, although the percent cleared has risen over time. We further find that most transactions resulted in increases in prices post-merger, suggesting a permissive antitrust posture. The price increases were considerably greater for mergers subject to conduct remedies than divestitures, corroborating doubt about the efficacy of conduct approaches. Finally, we find that the agencies cleared mergers without substantial price effects systematically and significantly more often than mergers resulting in large price increases. This suggests that agencies have been able to distinguish, on average, case deserving of approval from those raising the most serious competitive concerns.

Number of Pages in PDF File: 32

Keywords: merger, enforcement

JEL Classification: L12, L16

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Date posted: November 10, 2011 ; Last revised: May 3, 2013

Suggested Citation

Kwoka, Jr., John E., Does Merger Control Work? A Retrospective on U.S. Enforcement Actions and Merger Outcomes (April 4, 2012). Antitrust Law Journal , Vol. 78, 2013. Available at SSRN: https://ssrn.com/abstract=1954849 or http://dx.doi.org/10.2139/ssrn.1954849

Contact Information

John E. Kwoka (Contact Author)
Northeastern University - Department of Economics ( email )
301 Lake Hall
Boston, MA 02115
(617) 373-2882 (Phone)
(617) 373-3640 (Fax)
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