The Use of Quantitative Economic Techniques in EU Merger Control

24 Pages Posted: 25 Jan 2017

See all articles by Thomas Buettner

Thomas Buettner

Independent

Giulio Federico

Chief Economist Team, DG Competition, European Commission

Szabolcs Lorincz

European Commission, DG Competition, Chief Economist's Team

Date Written: December 1, 2016

Abstract

The European Commission's Directorate General for Competition often relies on quantitative economic analysis in its review of complex mergers. This analysis is typically developed during in-depth investigations (so-called Phase II reviews). There is a range of economic techniques that can be applied to the competitive assessment of mergers. The choice of the relevant economic methodology depends on the features of the market at hand, on the key questions raised by the merger, and on the availability of suitable data. Quantitative economic methods applied by the Commission to the assessment of mergers are often one of two broad types: merger simulation techniques and direct estimation methods. Merger simulations seek to approximate the effects of a merger on the main competitive variable of interest (typically price) through an internally coherent assumed model of competition in the industry which takes account of important observed or measured market features (such as substitution patterns and margins).

Direct estimation methods, on the other hand, seek to study the impact of past events in the markets at hand, using historical data. For example, direct estimation techniques can be used to measure the impact of past entry events (typically involving one or both of the merging parties) or past mergers. The insights from the direct estimation of past competitive events’ impact can then be used to make inferences on the possible effects of the merger at hand.

In this article we review the Commission’s recent application of these two families of quantitative economic methods in merger control.

Keywords: European Commission, merger control, quantitative methods

JEL Classification: L4, L13, D43, C63, C21

Suggested Citation

Buettner, Thomas and Federico, Giulio and Lorincz, Szabolcs, The Use of Quantitative Economic Techniques in EU Merger Control (December 1, 2016). Antitrust Magazine, Vol. 31, No. 1, 2016, Available at SSRN: https://ssrn.com/abstract=2901367

Thomas Buettner

Independent ( email )

Giulio Federico

Chief Economist Team, DG Competition, European Commission ( email )

Szabolcs Lorincz (Contact Author)

European Commission, DG Competition, Chief Economist's Team ( email )

MADO
Brussels, 1040
Belgium
+32.2.22.99.32.07 (Phone)

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