Political Influence and Merger Antitrust Reviews
82 Pages Posted: 4 Apr 2017 Last revised: 15 Sep 2017
Date Written: September 13, 2017
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: Suggested Citation