The Deterrence Effects of U.S. Merger Policy Instruments

Jo Seldeslachts and Joseph Clougherty

No 8482, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We estimate the deterrence effects of U.S. merger policy instruments with respect to the composition and frequency of future merger notifications. Data from the Annual Reports by the U.S. DOJ and FTC allow industry based measures over the 1986-1999 period of the conditional probabilities for eliciting investigations, challenges, prohibitions, court-wins and court-losses: deterrence variables akin to the traditional conditional probabilities from the economics of crime literature. We find the challenge-rate to robustly deter future horizontal (both relative and absolute) merger activity; the investigation-rate to slightly deter relative-horizontal merger activity; the court-loss-rate to moderately affect absolute-horizontal merger activity; and the prohibition-rate and court-win-rate to not significantly deter future horizontal mergers. Accordingly, the conditional probability of eliciting an antitrust challenge (i.e., remedies and prohibitions) involves the strongest deterrence effect from amongst the different merger policy instruments.

Keywords: Antitrust; Deterrence; Merger policy (search for similar items in EconPapers)
JEL-codes: K21 L40 L49 (search for similar items in EconPapers)
Date: 2011-07
New Economics Papers: this item is included in nep-com, nep-hme, nep-ind and nep-law
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The Deterrence Effects of US Merger Policy Instruments (2013)
Working Paper: The Deterrence Effects of U.S. Merger Policy Instruments (2011)
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