How Effective is European Merger Control?

Duso, Tomaso and Gugler, Klaus and Yurtoglu, Burcin B. (2011) How Effective is European Merger Control? European Economic Review, 55 (7). pp. 980-1006. ISSN 0014-2921


Download (358kB)


This paper applies an intuitive approach based on stock market data to a unique dataset of large concentrations during the period 1990-2002 to assess the effectiveness of European merger control. The basic idea is to relate announcement and decision abnormal returns. Under a set of four maintained assumptions, merger control might be interpreted to be effective if rents accruing due to the increased market power observed around the merger announcement are reversed by the antitrust decision, i.e. if there is a negative relation between announcement and decision abnormal returns. To clearly identify the events' competitive effects, we explicitly control for the market expectation about the outcome of the merger control procedure and run several robustness checks to assess the role of our maintained assumptions. We find that only outright prohibitions completely reverse the rents measured around a merger's announcement. On average, remedies seem to be only partially capable of reverting announcement abnormal returns. Yet they seem to be more effective when applied during the first rather than the second investigation phase and in subsamples where our assumptions are more likely to hold. Moreover, the European Commission appears to learn over time. (authors' abstract)

Item Type: Article
Additional Information: To see the final version of this paper please visit the publisher's website: Access to the published version may require a subscription.
Keywords: merger control / remedies / European Commission / event studies
Classification Codes: JEL L4, K21, G34, C2, L2
Divisions: Departments > Volkswirtschaft > Quantitative Volkswirtschaftslehre
Version of the Document: Accepted for Publication
Variance from Published Version: Minor
Depositing User: Dissertation Administrator
Date Deposited: 03 Apr 2012 13:19
Last Modified: 29 Mar 2015 10:36
Related URLs:


View Item View Item


Downloads per month over past year

View more statistics