Quantifying the Coordinated Effects of Partial Horizontal Acquisitions

Abstract

The growth of private-equity investment strategies in which firms often hold partial ownership interests in competing firms has led competition agencies to take an increased interest in assessing the competitive effects of partial horizontal acquisitions. We propose a methodology to evaluate the coordinated effects of such acquisitions in differentiated products industries. The acquisitions may be direct and indirect, and may or not correspond to control. The methodology, that nests full mergers, evaluates the impact on the range of discount factors for which coordination can be sustained. We provide an empirical application to several acquisitions in the wet shaving industry.

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

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