Merger Remedies, Incomplete Information, and Commitment

17 Pages Posted: 19 Jan 2021

See all articles by Bjørn Olav Johansen

Bjørn Olav Johansen

University of Bergen - Department of Economics

Tore Nilssen

University of Oslo - Department of Economics

Date Written: December 15, 2020

Abstract

Current EU law states that the competition authorities, in dealing with a merger proposal, cannot commit to specific remedies when rejecting proposals and essentially have to resort to accept or reject remedies proposed to it. We show that giving the authorities the power to propose, and commit to, remedies for a merger that they cannot accept in full will lead to a more efficient merger policy. We do this by setting up a theoretic model where government lacks information about the various markets affected by the merger and has resources to collect information on some but not all of them. The benefit of being able to commit is that government, in some cases, is able to obtain remedies rather than full stop of a merger by collecting information on relatively benign markets and, in some other cases, is able to obtain remedies even without spending resources on collecting information.

Keywords: merger policy, merger remedies, commitment

JEL Classification: L40, G34

Suggested Citation

Johansen, Bjørn Olav and Nilssen, Tore, Merger Remedies, Incomplete Information, and Commitment (December 15, 2020). Available at SSRN: https://ssrn.com/abstract=3750849 or http://dx.doi.org/10.2139/ssrn.3750849

Bjørn Olav Johansen

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

Tore Nilssen (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

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