The Deterrence Effects of U.S. Merger Policy Instruments

51 Pages Posted: 19 Dec 2012

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: 2012

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. Department of Justice and Federal Trade Commission 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, and the court-loss rate to moderately affect absolute levels of horizontal-merger activity; however, the investigation rate, prohibition rate and court-win rate do not significantly deter future horizontal mergers. Accordingly, the conditional probability of eliciting an antitrust challenge (i.e., remedies and prohibitions) is unique among the different merger policy instruments as it yields a robust deterrence effect.

JEL Classification: L40, L49, K21

Suggested Citation

Clougherty, Joseph A. and Seldeslachts, Jo, The Deterrence Effects of U.S. Merger Policy Instruments (2012). Available at SSRN: https://ssrn.com/abstract=2190352 or http://dx.doi.org/10.2139/ssrn.2190352

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 )

Mohrenstraße 58
Berlin, 10117
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
33
Abstract Views
704
PlumX Metrics