Is European M&A Regulation Protectionist?
46 Pages Posted: 22 Jul 2004
Date Written: February 2006
Why do regulatory authorities scrutinize mergers and acquisitions? The authorities themselves claim to be combating monopoly power and protecting consumers. But the last two decades of empirical research has found little supporting evidence for such motives. An alternative is that M&A regulation is actually designed to protect privileged firms. We provide a test of protectionism by studying whether European regulatory intervention is more likely when European firms are harmed by increased competition. Our findings raise a suspicion of protectionist motivations by the European regulator during the nineties. The results are robust to many statistical difficulties, including endogeneity between investor valuations and regulatory actions.
Keywords: merger and acquisition regulation protectionism
JEL Classification: G34 G38
Suggested Citation: Suggested Citation