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Quantifying the Coordinated Effects of Partial Horizontal Acquisitions

73 Pages Posted: 21 Jun 2013 Last revised: 15 Jul 2017

Duarte Brito

New University of Lisbon

Ricardo Ribeiro

Universidade Católica Portuguesa, Católica Porto Business School

Helder Vasconcelos

Universidade do Porto - Faculdade de Economia (FEP)

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Date Written: July 13, 2017

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 to quantify the coordinated effects of such acquisitions on differentiated products industries, by evaluating the impact of such acquisitions on the minimum discount factors for which coordination can be sustained. The methodology can deal with settings involving all type of owners and ownership rights: owners that can be internal to the industry (rival firms) and external to the industry; and ownership rights that can involve financial interests and corporate control, can be direct and indirect, can be partial or full. We provide an empirical application of our proposed methodology to several acquisitions in the wet shaving industry that give rise to cross- and common-ownership structures. The results seem to suggest that the incentives of (i) the acquiring party's firm to coordinate are non-decreasing after an acquisition (independently of whether it involves full or partial financial or corporate control rights, by internal or external owners), (ii) the acquired firm to coordinate are non-decreasing after acquisitions involving full or partial corporate control rights, but non-increasing after acquisitions involving full or partial financial rights, and (iii) the remaining firms in the industry to coordinate are non-increasing after an acquisition (again, independently of whether it involves full or partial financial or corporate control rights, by internal or external owners).

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 (July 13, 2017). 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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