Quantifying the Coordinated Effects of Partial Horizontal Acquisitions

74 Pages Posted: 21 Jun 2013 Last revised: 26 Sep 2018

See all articles by Duarte Brito

Duarte Brito

New University of Lisbon

Ricardo Ribeiro

Universidade Católica Portuguesa, Católica Porto Business School

Helder Vasconcelos

Universidade do Porto - Faculdade de Economia (FEP)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2, 2018

Abstract

Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive effects of partial acquisitions. We propose an empirical structural methodology, which can deal with settings involving all types of owners and ownership rights, to quantify the coordinated effects of partial horizontal acquisitions on differentiated products industries, by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained. We also provide an empirical application of the methodology to several acquisitions in the wet shaving industry that give rise to cross- and common-ownership structures. The results are as follows (i) the incentives to coordinate of the firms that the acquiring party is - pre-acquisition - able to influence are non-decreasing with any acquisition; (ii) the incentives to coordinate of the acquired firm are non-decreasing with acquisitions involving full or partial both financial and corporate control rights, but non-increasing with acquisitions involving full or partial solely financial rights; and (iii) the incentives to coordinate of the remaining firms in the industry are non-increasing with any acquisition. This implies that the coordinated effects of partial horizontal acquisitions are, in general, ambiguous, which illustrates the importance of an empirical structural methodology.

Keywords: Antitrust, Coordinated Effects, Partial Acquisitions, Oligopoly, Differentiated Products, Demand Estimation

JEL Classification: D12, C54, L13, L41, L66

Suggested Citation

Brito, Duarte and Ribeiro, Ricardo and Vasconcelos, Helder, Quantifying the Coordinated Effects of Partial Horizontal Acquisitions (August 2, 2018). European Economic Review, Vol. 110, 2018. Available at SSRN: https://ssrn.com/abstract=2282126 or http://dx.doi.org/10.2139/ssrn.2282126

Duarte Brito

New University of Lisbon ( email )

1099-085 Lisboa, 1099-085
Portugal

Ricardo Ribeiro (Contact Author)

Universidade Católica Portuguesa, Católica Porto Business School ( email )

Rua Diogo Botelho, 1327
Porto, 4169-005
Portugal
+351-22619-6200 (Phone)
+351-22619-6291 (Fax)

Helder Vasconcelos

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Dr. Roberto Frias
s/n
4200-464 Porto, 4200-464
Portugal

HOME PAGE: http://www.fep.up.pt/docentes/hvasconcelos

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