The Political Economy of European Merger Control: Evidence Using Stock Market Data

WZB Discussion Paper No. FS IV 02-34

48 Pages Posted: 13 Nov 2003

See all articles by Tomaso Duso

Tomaso Duso

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

Damien J. Neven

University of Geneva; Centre for Economic Policy Research (CEPR)

Lars-Hendrik Röller

ESMT European School of Management and Technology; Centre for Economic Policy Research (CEPR); WZB Berlin Social Science Center - Competitiveness and Industrial Change

Date Written: April 2006

Abstract

The objective of this paper is to investigate the determinants of EU merger control decisions. We consider a sample of 167 EU mergers between 1990 and 2002 and evaluate their competitive consequences by the reaction of the stock market price of competitors to the merging firms. We then account for the discrepancies between the actual and the optimal decision as indicated by the stock market in terms of the political economy surrounding the cases. Our results suggest that the commission's decisions cannot be solely accounted for by protecting consumer surplus. The institutional and political environment does matter. As far as influence is concerned, however, our data suggests that the commission's decisions are not sensitive to firms' interests. Instead, the evidence suggests that other factors - such as market definition and procedural aspects, as well as country and industry effect - do play a significant role.

Keywords: Merger Control, Event Studies, Lobbying, EU

JEL Classification: L4, K21, C12, C1

Suggested Citation

Duso, Tomaso and Neven, Damien J. and Röller, Lars-Hendrik, The Political Economy of European Merger Control: Evidence Using Stock Market Data (April 2006). WZB Discussion Paper No. FS IV 02-34. Available at SSRN: https://ssrn.com/abstract=467323 or http://dx.doi.org/10.2139/ssrn.467323

Tomaso Duso

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

Damien J. Neven (Contact Author)

University of Geneva ( email )

Graduate Institute of International Studies
CH-1211 Geneve 4
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Lars-Hendrik Röller

ESMT European School of Management and Technology ( email )

Schlossplatz 1
Berlin, 10178
Germany

HOME PAGE: http://www.esmt.org/eng/faculty-research/lars-hendrik-roeller/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

WZB Berlin Social Science Center - Competitiveness and Industrial Change ( email )

Reichpietschufer 50
10785 Berlin
Germany
+49 30 2549 1440 (Phone)
+49 30 2549 1442 (Fax)

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