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Political Influence and Merger Antitrust Reviews

82 Pages Posted: 4 Apr 2017 Last revised: 15 Sep 2017

Mihir N. Mehta

University of Michigan at Ann Arbor

Suraj Srinivasan

Harvard Business School

Wanli Zhao

Renmin University of China

Date Written: September 13, 2017

Abstract

Antitrust regulators play a critical role in protecting market competition. We examine whether firms can use the political process to opportunistically influence antitrust reviews of corporate merger transactions. We exploit the fact that in some mergers, acquirers and/or targets are connected to powerful U.S. politicians that serve on the two congressional committees with antitrust regulator oversight. We find that merger parties with these connections receive relatively favorable antitrust review outcomes. To establish a causal link, we use plausibly exogenous shocks to firm-politician links and a falsification test. Politician incentives to influence merger antitrust review outcomes appear to be driven by lobbying, contributions, and prior business connections. In sum, our findings suggest that political interference affects the ability of antitrust regulators to provide independent recommendations about the anti-competitive effects of mergers.

Keywords: Political Economy, Antitrust, FTC, DOJ, Senate Judiciary Committee, House Judiciary Committee, Mergers and Acquisitions

JEL Classification: D72, G34, G38, K21

Suggested Citation

Mehta, Mihir N. and Srinivasan, Suraj and Zhao, Wanli, Political Influence and Merger Antitrust Reviews (September 13, 2017). Available at SSRN: https://ssrn.com/abstract=2945020 or http://dx.doi.org/10.2139/ssrn.2945020

Mihir N. Mehta (Contact Author)

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Suraj Srinivasan

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=pub&facId=10700

Wanli Zhao

Renmin University of China ( email )

59 Zhongguancun Street
Beijing, 100872
China

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