Rivals Exit And Vertical Merger Evaluation

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Rivals' Exit and Vertical Merger Evaluation

Author : Javier D. Donna
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Rivals' Exit and Vertical Merger Evaluation by : Javier D. Donna

Download or read book Rivals' Exit and Vertical Merger Evaluation written by Javier D. Donna and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We discuss a subset of vertical mergers, where the exercise of market power and the efficiencies enabled by a vertical merger reduce rivals' profits, making rivals' exit a potentially serious concern. Rivals' exit can fundamentally alter the welfare analysis of vertical mergers due to the reduction in product variety to consumers and the reduction in the number of competitors that would otherwise exert downward pricing pressure. An exit-inducing vertical merger might reduce welfare even if it is a welfare-enhancing merger absent exit. We present a theoretical framework to analyze vertical mergers that focuses on the possibility and consequences of exit, discuss the antitrust implications for merger evaluation, and provide examples. We argue that the possibility of rivals' exit should be an integral part of the analysis of vertical mergers.

Vertical Mergers, Foreclosure and Raising Rivals' Costs - Experimental Evidence

Author : Hans-Theo Normann
Publisher :
ISBN 13 : 9783863040048
Total Pages : 29 pages
Book Rating : 4.0/5 (4 download)

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Book Synopsis Vertical Mergers, Foreclosure and Raising Rivals' Costs - Experimental Evidence by : Hans-Theo Normann

Download or read book Vertical Mergers, Foreclosure and Raising Rivals' Costs - Experimental Evidence written by Hans-Theo Normann and published by . This book was released on 2010 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Antitrust Analysis of Vertical Mergers

Author : Koren Wong-Ervin
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Antitrust Analysis of Vertical Mergers by : Koren Wong-Ervin

Download or read book Antitrust Analysis of Vertical Mergers written by Koren Wong-Ervin and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The generally well-accepted belief motivating modern antitrust analysis of vertical mergers -- i.e., acquisitions that combine companies in different levels of the same supply chain -- is that they are generally procompetitive or neutral. That belief is based upon a significant body of empirical evidence. Indeed, as former U.S. Federal Trade Commission (FTC) Bureau of Economics head Francine Lafontaine and Margaret Slade concluded, “[c]onsistent with the large set of efficiency motives for vertical mergers . . . the [empirical] evidence on the consequences of vertical mergers suggests that consumers mostly benefit from mergers that firms undertake voluntarily.” That view of the empirical evidence is consistent with other meta-studies of the empirical evidence by leading industrial organization economists from academia and the U.S. antitrust agencies. Consistent with this evidence, the U.S. antitrust agencies typically have rarely challenged vertical mergers. When they have challenged vertical mergers, they have tended to resolve concerns with narrowly tailored behavioral remedies, such as firewalls to prevent the sharing of rivals' competitively sensitive information, non-discrimination clauses to eliminate incentives to disfavor rivals, and requirements to supply and/or license competitors. This Article is organized as follows: Section I sets forth the empirical evidence supporting the widespread understanding that vertical integration is generally procompetitive or neutral, and responds to the major critiques of these studies. Section I also discusses typical justifications for vertical integration, namely avoiding the costly and risky processes of forming, administering, and enforcing contracts with independent suppliers and customers. Section II lays out the economic approach to antitrust analysis of vertical mergers, briefly addressing calls for the U.S. antitrust agencies to update their 1984 Non-Horizontal Merger Guidelines. Section III discusses remedies. The final section offers closing thoughts focusing on the relative expertise of agencies and courts as compared to merging parties in evaluating the costs and benefits of vertical integration.

The Economic Assessment of Mergers Under European Competition Law

Author : Daniel Gore
Publisher : Cambridge University Press
ISBN 13 : 1107007720
Total Pages : 559 pages
Book Rating : 4.1/5 (7 download)

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Book Synopsis The Economic Assessment of Mergers Under European Competition Law by : Daniel Gore

Download or read book The Economic Assessment of Mergers Under European Competition Law written by Daniel Gore and published by Cambridge University Press. This book was released on 2013-04-25 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.

The Antitrust Paradox

Author : Robert Bork
Publisher :
ISBN 13 : 9781736089712
Total Pages : 536 pages
Book Rating : 4.0/5 (897 download)

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Book Synopsis The Antitrust Paradox by : Robert Bork

Download or read book The Antitrust Paradox written by Robert Bork and published by . This book was released on 2021-02-22 with total page 536 pages. Available in PDF, EPUB and Kindle. Book excerpt: The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.

Analyzing Vertical Mergers

Author : Roger D. Blair
Publisher :
ISBN 13 :
Total Pages : 63 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Analyzing Vertical Mergers by : Roger D. Blair

Download or read book Analyzing Vertical Mergers written by Roger D. Blair and published by . This book was released on 2020 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the adoption of the 2020 Vertical Merger Guidelines, the U.S. antitrust agencies have updated their guidance on vertical mergers for the Twenty-First Century. Although economists have long recognized the procompetitive benefits most vertical mergers generate, the law has not always followed suit, and has sometimes condemned vertical mergers for making the merged firm more efficient. In this article, we attempt to catalogue the extensive list of efficiencies that vertical mergers can generate, trace the often halting efforts to incorporate these insights into the law, and propose a framework that courts and agencies can use to assess the likely competitive effects of vertical transactions. We draw heavily upon leading cases, particularly Baker Hughes and AT&T, with two refinements. First, consistent with the final Guidelines (but not the earlier draft) and the economic literature noting a symmetry between unilateral anticompetitive effects (raising rivals' costs) and procompetitive effects (the elimination of double marginalization), which we call the “unilateral effects tradeoff,” we argue a plaintiff alleging a raising rivals cost (RRC) theory of harm must also address EDM as part of its prima facie case. Second, if the plaintiff carries its prima facie burden, then the defendant should be able to argue, and courts and Agencies should seriously consider, the full range of procompetitive efficiencies, which we call a “holistic efficiency analysis.”

Handbook of Antitrust Economics

Author : Paolo Buccirossi
Publisher :
ISBN 13 :
Total Pages : 716 pages
Book Rating : 4.3/5 (91 download)

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Book Synopsis Handbook of Antitrust Economics by : Paolo Buccirossi

Download or read book Handbook of Antitrust Economics written by Paolo Buccirossi and published by . This book was released on 2008-03-21 with total page 716 pages. Available in PDF, EPUB and Kindle. Book excerpt: Experts examine the application of economic theory to antitrust issues in both the United States and Europe, discussing mergers, agreements, abuses of dominance, and the impact of market features. Over the past twenty years, economic theory has begun to play a central role in antitrust matters. In earlier days, the application of antitrust rules was viewed almost entirely in formal terms; now it is widely accepted that the proper interpretation of these rules requires an understanding of how markets work and how firms can alter their efficient functioning. The Handbook of Antitrust Economics offers scholars, students, administrators, courts, companies, and lawyers the economist's view of the subject, describing the application of newly developed theoretical models and improved empirical methods to antitrust and competition law in both the United States and the European Union. (The book uses the U.S. term “antitrust law” and the European “competition law” interchangeably, emphasizing the commonalities between the two jurisdictions.) After a general discussion of the use of empirical methods in antitrust cases, the Handbook covers mergers, agreements, abuses of dominance (or unilateral conducts), and market features that affect the way firms compete. Chapters examine such topics as analyzing the competitive effects of both horizontal and vertical mergers, detecting and preventing cartels, theoretical and empirical analysis of vertical restraints, state aids, the relationship of competition law to the defense of intellectual property, and the application of antitrust law to “bidding markets,” network industries, and two-sided markets. Contributors Mark Armstrong, Jonathan B. Baker, Timothy F. Bresnahan, Paulo Buccirossi, Nicholas Economides, Hans W. Friederiszick, Luke M. Froeb, Richard J. Gilbert, Joseph E. Harrington, Jr., Paul Klemperer, Kai-Uwe Kuhn, Francine Lafontaine, Damien J. Neven, Patrick Rey, Michael H. Riordan, Jean-Charles Rochet, Lars-Hendrick Röller, Margaret Slade, Giancarlo Spagnolo, Jean Tirole, Thibaud Vergé, Vincent Verouden, John Vickers, Gregory J. Werden

Evaluating the Evidence on Vertical Mergers

Author : Marissa Beck
Publisher :
ISBN 13 :
Total Pages : 25 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Evaluating the Evidence on Vertical Mergers by : Marissa Beck

Download or read book Evaluating the Evidence on Vertical Mergers written by Marissa Beck and published by . This book was released on 2020 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: The U.S. Department of Justice and Federal Trade Commission issued draft Vertical Merger Guidelines on January 10, 2020. In the discussion on vertical merger policy, some commenters have relied on surveys of the empirical economic literature to justify a procompetitive presumption. This comment reviews two frequently cited surveys of empirical evidence on vertical integration as of 2005-2007, as well as more recent studies not included in those surveys, to determine the extent to which they find that the vertical integration they study was procompetitive or anticompetitive. Upon careful inspection, the evidence they provide on the change in welfare due to vertical mergers is decidedly mixed. Perhaps more importantly, taken as a whole, these studies do not provide evidence for the proposition that all or most vertical mergers are good for consumers.

Vertical Mergers and Entrepreneurial Exit

Author : D. Daniel Sokol
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Vertical Mergers and Entrepreneurial Exit by : D. Daniel Sokol

Download or read book Vertical Mergers and Entrepreneurial Exit written by D. Daniel Sokol and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The idea that tech companies should be permitted to acquire nascent start-ups is under attack from antitrust populists. Yet, this debate on vertical mergers has overlooked important empirical contributions regarding innovation-related mergers in the strategy literature. This Article explores the extant empirical strategy literature, which generally identifies a procompetitive basis that supports vertical mergers as efficiency enhancing. This literature solidifies the current general vertical merger presumption that favors a procompetitive vertical merger policy for purposes of government merger enforcement. However, the procompetitive benefit for a presumption of merger approval for most vertical mergers does not end with the synthesis of an under-explored literature. Rather, the broader implications of vertical mergers and presumptions of legality have another overlooked implication--a change of policy may dampen entrepreneurial investment and innovation. Entrepreneurial exit is critical to a well-functioning entrepreneurial ecosystem, as the possibility of entrepreneurial exit via vertical merger is now the most usual form of liquidity event/exit for founders and venture capitalists. Vertical merger policy that would unduly restrict large tech firms from undertaking acquisitions in industries as diverse as finance, pharmaceuticals, medical devices, technology hardware, and internet platforms would hurt incentives for innovation in the economy by chilling business formation in start-ups. Increased difficulty in the exit for founders and ventures capitalists makes investment in such ventures less likely, since the purpose of such investment is to reap the rewards of scaling a venture to exit. Thus, a general inference that makes vertical acquisitions, particularly in tech, more difficult to undertake leads to direct contravention of antitrust's role in promoting competition and innovation. This Article explores how entrepreneurial exit for founders and venture capitalists is best served by promoting a robust vertical merger policy, though one that intervenes in cases of specific anticompetitive harm.

Antitrust Law Journal

Author :
Publisher :
ISBN 13 :
Total Pages : 1032 pages
Book Rating : 4.:/5 (51 download)

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Book Synopsis Antitrust Law Journal by :

Download or read book Antitrust Law Journal written by and published by . This book was released on 1986 with total page 1032 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Analyzing Vertical Mergers with Auctions Upstream

Author : Joseph U. Podwol
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Analyzing Vertical Mergers with Auctions Upstream by : Joseph U. Podwol

Download or read book Analyzing Vertical Mergers with Auctions Upstream written by Joseph U. Podwol and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a model of vertical mergers with open auctions upstream, This setting may be appropriate for industries where inputs are procured via auction-like "requests for proposal." For example, Drennan et al (2020) reports that a model of this type was used during the CVS-Aetna merger investigation, Our approach contrasts with a growing body of work on vertical mergers where input prices are determined through Nash bargaining, We discuss how the vertical merger effects of raising rivals' costs and eliminating double markup might be quantified in our particular model.

U.S. Vertical Merger Guidelines

Author : Koren Wong-Ervin
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis U.S. Vertical Merger Guidelines by : Koren Wong-Ervin

Download or read book U.S. Vertical Merger Guidelines written by Koren Wong-Ervin and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article offers the following recommendations, focusing on #3 and 6:1. Specifics on how the Agencies will implement the principles set forth in the Guidelines. The Guidelines state throughout that the Agencies “may consider” certain factors; this language should be revised to say “will” or “usually will” consider. 2. An explicit recognition that empirical evidence indicates that vertical mergers are generally procompetitive or benign and, as the Agencies have previously stated, “vertical mergers merit a stronger presumption of being efficient than do horizontal mergers.”3. A clear statement that the government has the burden on EDM given that such calculations are part of the math of the raising rivals costs (RRC) argument and the two cannot be analyzed in isolation before evaluating their net effect. In other words, EDM can prevent RRC, not just net it out. The prima facie case should not, however, extend to netting the two out, but rather to showing that the merger is likely to result in RRC.4. An explicit statement that the relevant inquiry for RRC is the effect on downstream competition and that raising the cost of an upstream input with no downstream effects does not warrant intervention. While examples in the Guidelines seem to suggest that the Agencies will follow this principle, an explicit statement would be helpful. 5. Explicitly requiring both the incentive and the ability to engage in anticompetitive conduct given that, without the ability there can be no harm, and lack of incentives is a strong indication that there are legitimate business reasons for the deal. 6. A recognition of the coordination problem presented by vertical dealing and that achieving EDM (and other efficiencies) through contracting presents challenges given the costly process of forming, administering, and enforcing contracts with independent suppliers.7. Replacing the 20% market-share language with a clear safe harbor and increasing the relevant market share threshold (but not necessarily the “related product” threshold) from 20% to at least 30%.

Ex-post Evaluation of Vertical Mergers

Author :
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (133 download)

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Book Synopsis Ex-post Evaluation of Vertical Mergers by :

Download or read book Ex-post Evaluation of Vertical Mergers written by and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Revising the U.S. Vertical Merger Guidelines

Author : Steven C. Salop
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Revising the U.S. Vertical Merger Guidelines by : Steven C. Salop

Download or read book Revising the U.S. Vertical Merger Guidelines written by Steven C. Salop and published by . This book was released on 2015 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Mergers and acquisitions are a major component of antitrust law and practice. The U.S. antitrust agencies spend a majority of their time on merger enforcement. The focus of most merger review at the agencies involves horizontal mergers, that is, mergers among firms that compete at the same level of production or distribution.Vertical mergers combine firms at different levels of production or distribution. In the simplest case, a vertical merger joins together a firm that produces an input (and competes in an input market) with a firm that uses that input to produce output (and competes in an output market).Over the years, the agencies have issued Merger Guidelines that outline the type of analysis carried out by the agencies and the agencies' enforcement intentions in light of state of the law. These Guidelines are used by agency staff in evaluating mergers, as well as by outside counsel and the courts.Guidelines for vertical mergers were issued in 1968 and revised in 1984. However, the Vertical Merger Guidelines have not been revised since 1984. Those Guidelines are now woefully out of date. They do not reflect current economic thinking about vertical mergers. Nor do they reflect current agency practice. Nor do they reflect the analytic approach taken in the 2010 Horizontal Merger Guidelines. As a result, practitioners and firms lack the benefits of up-to-date guidance from the U.S. enforcement agencies.

Vertical Integration and Overbuying

Author : Ian Ayres
Publisher :
ISBN 13 :
Total Pages : 27 pages
Book Rating : 4.:/5 (2 download)

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Book Synopsis Vertical Integration and Overbuying by : Ian Ayres

Download or read book Vertical Integration and Overbuying written by Ian Ayres and published by . This book was released on 1988 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Evaluating Mergers in the Presence of Dynamic Competition Using Impacts on Rivals

Author : Darren Filson
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Evaluating Mergers in the Presence of Dynamic Competition Using Impacts on Rivals by : Darren Filson

Download or read book Evaluating Mergers in the Presence of Dynamic Competition Using Impacts on Rivals written by Darren Filson and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We present evidence that event studies can help antitrust agencies forecast impacts of mergers on innovation. In large pharmaceutical mergers, cumulative abnormal returns on portfolios of rivals predict post-merger changes in the combined firm's R&D intensity. More favorable impacts on rivals are associated with lower intensities, which is consistent with softening competition. Matching merging firms to similar non-merging firms suggests we can attribute the changes in R&D intensity to the mergers. We highlight the importance of deducting “expenses” associated with in-process R&D and provide guidance on how to define rivals, construct portfolios and use event studies in merger evaluations.

Counting Rivals Or Measuring Share

Author : Malcolm B. Coate
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Counting Rivals Or Measuring Share by : Malcolm B. Coate

Download or read book Counting Rivals Or Measuring Share written by Malcolm B. Coate and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the Federal Trade Commission's unilateral effects merger policy using a sample of 184 investigations undertaken between 1993 and mid-2010. A review of the files suggests that roughly half of the sample is evaluated with a dominant firm/monopoly model, while the rest of the cases require a more complex unilateral effects analysis. Deterministic modeling based on the number of significant rivals suggests that the four-to-three transaction in a market with impediments to entry represents the marginal merger challenge. Case specific facts explain deviations from this rule and suggest that critical diversion ratios fall into the 25-30 percent range. Share based indices (post-merger market share, change in the Herfindahl, or a share-based Gross Upward Pressure on Price variable) can be used, but require the definition of a market and do not predict outcomes as well as the significant rivals' model. An Appendix details the various reasons why the staff declined to apply a unilateral effects analysis to conclude a merger was likely to substantially lessen competition in a broader sample of differentiated products mergers.