Threatening to Buy: Private Equity Buyouts and Antitrust Policy
10 Pages Posted: 20 Dec 2017
Date Written: December 18, 2017
Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise merger-stable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable — but consumer surplus-enhancing — mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.
Keywords: Antitrust Policy, M&As, Private Equity, Temporary Ownership
JEL Classification: G32, G34, L13, L22, L40
Suggested Citation: Suggested Citation