Merger Policy in Digital Markets: An Ex-Post Assessment

45 Pages Posted: 11 Dec 2019

See all articles by Elena Argentesi

Elena Argentesi

University of Bologna - Department of Economics

Paolo Buccirossi

Independent

Emilio Calvano

University of Bologna - Department of Economics; University of Toulouse 1 - Department of Economics; CSEF - Center for Studies in Economics and Finance

Tomaso Duso

German Institute for Economic Research (DIW Berlin); TU Berlin- Faculty of Economics and Management - Empirical Industrial Organization; Centre for Economic Policy Research (CEPR)

Alessia Marrazzo

Lear - Laboratory of Economics, Antitrust, Regulation

Salvatore Nava

Lear - Laboratory of Economics, Antitrust, Regulation

Multiple version iconThere are 3 versions of this paper

Date Written: December 2019

Abstract

This paper presents a broad retrospective evaluation of mergers and merger decisions in the digital sector. We first discuss the most crucial features of digital markets such as network effects, multi-sidedness, big data, and rapid innovation that create important challenges for competition policy. We show that these features have been key determinants of the theories of harm in major merger cases in the past few years. We then analyse the characteristics of almost 300 acquisitions carried out by three major digital companies – Amazon, Facebook, and Google – between 2008 and 2018. We cluster target companies on their area of economic activity and show that they span a wide range of economic sectors. In most cases, their products and services appear to be complementary to those supplied by the acquirers. Moreover, target companies seem to be particularly young, being four-years-old or younger in nearly 60% of cases at the time of the acquisition. Finally, we examine two important merger cases, Facebook/Instagram and Google/Waze, providing a systematic assessment of the theories of harm considered by the UK competition authorities as well as evidence on the evolution of the market after the transactions were approved. We discuss whether the CAs performed complete and careful analyses to foresee the competitive consequences of the investigated mergers and whether a more effective merger control regime can be achieved within the current legal framework.

Keywords: Digital Markets, Mergers, Network Effects, Big Data, Platforms, Ex-post, Antitrust

JEL Classification: L4, K21

Suggested Citation

Argentesi, Elena and Buccirossi, Paolo and Calvano, Emilio and Duso, Tomaso and Marrazzo, Alessia and Nava, Salvatore, Merger Policy in Digital Markets: An Ex-Post Assessment (December 2019). DIW Berlin Discussion Paper No. 1836 (2019), Available at SSRN: https://ssrn.com/abstract=3501501 or http://dx.doi.org/10.2139/ssrn.3501501

Elena Argentesi

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, BO 40141
Italy
+39 051 209 2664 (Phone)
+39 051 209 8040 (Fax)

HOME PAGE: http://https://www.unibo.it/sitoweb/elena.argentesi/en

Paolo Buccirossi

Independent ( email )

Emilio Calvano

University of Bologna - Department of Economics ( email )

Bologna
Italy

University of Toulouse 1 - Department of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

CSEF - Center for Studies in Economics and Finance ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

Tomaso Duso (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

TU Berlin- Faculty of Economics and Management - Empirical Industrial Organization ( email )

Berlin, 10585
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Alessia Marrazzo

Lear - Laboratory of Economics, Antitrust, Regulation ( email )

Via di Monserrato, 48
Rome, 00186
Italy

Salvatore Nava

Lear - Laboratory of Economics, Antitrust, Regulation ( email )

Via di Monserrato, 48
Rome, 00186
Italy

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