The Effects of Antitrust Laws on Horizontal Mergers: International Evidence
Journal of Financial and Quantitative Analysis, Forthcoming
52 Pages Posted: 9 Jan 2023
Date Written: January 6, 2023
This study examines how antitrust law adoptions affect horizontal merger and acquisition (M&A) outcomes. Using the staggered introduction of competition laws in 20 countries, we find antitrust regulation decreases acquirers’ five-day cumulative abnormal returns surrounding horizontal merger announcements. A decrease in deal value, target book assets, and industry peers' announcement returns are consistent with the market power hypothesis. Exploiting antitrust law adoptions addresses a downward bias to an estimated effect of antitrust enforcement (Baker (2003)). The potential bias from heterogeneous treatment effects does not nullify our results. Overall, antitrust policies seem to deter post-merger monopolistic gains, potentially improving customer welfare.
Keywords: antitrust law, merger control, horizontal M&A, market power
JEL Classification: G14, G34
Suggested Citation: Suggested Citation