Assessing EU Merger Control through Compensating Efficiencies

Discussion Papers 1979, 47 S.

Pauline Affeldt, Tomaso Duso, Klaus Gugler, Joanna Piechucka

2021

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Abstract

Worldwide, the overwhelming majority of large horizontal mergers are cleared by antitrust authorities unconditionally. The presumption seems to be that efficiencies from these mergers are sizeable. We calculate the compensating efficiencies that would prevent a merger from harming consumers for 1,014 mergers affecting 12,325 antitrust markets scrutinized by the European Commission between 1990 and 2018. Compensating efficiencies seem too large to be achievable for many mergers. Barriers to entry and the number of firms active in the market are the most important factors determining their size. We highlight concerns about the Commission’s merger enforcement being too lax.

Pauline Affeldt

Research Associate in the Firms and Markets Department

Tomaso Duso

Head of Department in the Firms and Markets Department



JEL-Classification: L19;L24;L40;K21
Keywords: Compensating efficiencies, Efficiency gains, Merger control, Concentration, Screens, HHI, Mergers, Unilateral Effects, Market Definition, Entry barriers

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