This thesis presents three essays on the motives for mergers and the determinants of U.S. horizontal merger antitrust case selection. These essays contribute to the debate on whether mergers increase social welfare and on the efficiency of antitrust intervention. The first essay explores the market power motive for horizontal mergers by examining the relation between the announcement wealth effects to merging firms and their reliant corporate customers. Large sample studies generally conclude that efficiency considerations drive horizontal mergers and find little market power, which implies a non-negative wealth effect relation between these two parties along the supply chain. When I examine the endogenous stock market reactions to merger announcements with instrumentation, however, my results overturn this inference: I find that greater abnormal returns to merging firms systematically relate to lower abnormal returns to reliant customers. This wealth transfer effect exists for deals in industries with little foreign competition but not for deals in industries with intense foreign competition. These results suggest that increased market power is a key driver of horizontal mergers. In the second essay, I investigate the determinants of U.S. antitrust invention by examining horizontal merger antitrust case selection in the U.S. manufacturing sector during 1980-2009. I find no evidence supporting the consumer protection claim of the government's antitrust agencies. Instead, I find that the likelihood of antitrust intervention is negatively related to foreign import pressure. Hitting a market concentration hurdle criterion also predicts intervention. In addition, industry rivals seem able to exert pressure for antitrust intervention to avoid a competitive disadvantage. I identify two rival groups that account for the demand for antitrust regulation, local rivals and rivals producing less specialised products. The third essay examines the motives for related mergers from the perspective of product market similarity. Using Hoberg and Phillips' (2014) text-based product similarity measure, I find that when an acquirer's product is more similar to those of its rivals, a related merger results in a greater post-merger product price and lower market share for the combined firm. Moreover, for related mergers in more homogenous product markets, the stock market reactions to the merger announcement are higher for the combined firm and for product market rivals, but lower for reliant corporate customers. Overall, the evidence on both product market real performance and stock market reactions is consistent with the wealth transfer effect of related mergers, and suggests that the primary motive for firms to merge with product market competitors is to gain market power rather than to achieve efficiencies.

US antitrust policy takes as its objective consumer welfare, not total economic welfare. With that objective, Joe Bain's definition of entry barriers is more useful than George Stigler's or definitions based on economic welfare. It follows that economies of scale that involve sunk costs may create antitrust barriers to entry. A simple model shows that sunk costs without scale economies may discourage entry without creating an antitrust entry barrier.

Thesis advisor: Julie H. Mortimer / Three self-contained essays explore government regulation in the airline industry, and how such policies affect competition. The first essay explores the proposed merger between US Airways and American Airlines in 2013, approved by the US Department of Justice (DOJ) under the condition that 104 airport slots (“landing rights”) at Ronald Reagan Washington National Airport, DC, be divested to low cost carriers. To investigate the efficacy of the slot divestment, I estimate demand and cost parameters along with bounds on the shadow price of an airline slot, and simulate counterfactual post-merger prices and quantities with and without the regulatory divestment. I find that the merger and associated divestment together increased consumer surplus for markets involving Reagan Airport by roughly 25%. This increase in consumer welfare happened because the median price fell and the quantity of passengers increased. I show that the marginal value of a slot to an airline is decreasing in total slots, validating the DOJ’s decision to divest slots from the largest incumbent (US Airways, whose marginal value was $153 per flight) to new entrants with high valuation (like Southwest, $852). Beyond providing a key input to merger analyses, my approach can also aid in analyzing voluntary exchanges of airline slots, which are subject to DOJ approval due to their perceived anti-competitive effects. The second essay investigates the impact of airport slots on competition in general. Congestion is managed in high-density airports by capping the number of flights permitted in any given hour and allocating the rights (or slots) to a takeoff or landing among airlines. Airlines must use their slots at least 80% of the time to keep them for the next season. This rule creates a perverse incentive for airlines to hold on to underutilized slots by operating unprofitable flights instead of forfeiting these slots to a rival. Using exogenous removal of slot control at the Newark Airport in 2016, we investigate the lengths at which airlines go to meet the minimum requirements that let them keep the slots while violating what a neutral observer might call the “spirit” of the regulation. In my third essay, I assess the effectiveness of the gross upward pricing pressure index (GUPPI) in predicting price changes of the 2013 merger between US Airways and American Airlines. I compute GUPPI using only publicly available data, and find that it is close to the observed average increase in price. However, unlike most markets, flights to/from Reagan Airport experience a price drop, likely due to mandated structural remedies; the GUPPI predicts a price increase at Reagan Airport, whereas a full merger simulation correctly predicts a price reduction. I argue that the divergence between GUPPI and, if appropriate, the more accurate predictions of the merger simulation is due to the weaker assumptions made under the simulation. This underscores the fact that while GUPPI, with its restrictive assumptions and low computational burden, can be a good primary screening tool, it does not negate the necessity of employing a more rigorous secondary tool (such as a merger simulation) when assessing mergers. / Thesis (PhD) — Boston College, 2022. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

Master of Arts / Department of Economics / Yang-Ming Chang / This report examines merger incentives of cost asymmetric firms under product differentiation and their welfare implications. Considering a simple contract under which merger profit is distributed according to the proportions of differential marginal costs between duopolistic firms, we show in a stylized model that for almost all parameter ranges (in terms of market competition intensity and marginal cost differential), a low-cost firm may have no incentive to merge with a high-cost firm whereas the high-cost firm always finds merger to be profitable. Only when marginal cost differential is sufficiently low and the degree of product similarity is sufficiently high will both the low-cost firm and the high-cost firm share the common interest in merger. On the other hand, the merger equilibrium is not welfare-improving, regardless of whether the firms initially compete in quantities or prices. Viewed from the perspective of production efficiency, mergers with differentiated products thus create a fundamental conflict between the maximization of consumer and social welfare and the maximization of firm profits. We also examine the scenario that merger takes place when merger profit exceeds the sum of firm profits under duopoly, without considering how merger profit is distributed between the firms. We discuss the conditions under which mergers may or may not be welfare-improving.

Leniency Programmes have been introduced as a complementary measure in the enforcement of competition law in detecting cartels, on the basis that hard to find evidence will be provided by undertakings coming forward to confess, in exchange for immunity or reduction in fines. The advantages of leniency are deemed to be twofold, since evidence is thereby expected to be given voluntarily, and in turn it would save up the limited resources available to enforcement authorities, by reducing lengthy investigations in search of evidence. Therefore, the widely accepted view by regulators, economists, and lawyers alike is that leniency is by far the most effective method of detecting and deterring anticompetitive activities by undertakings. An 'undertaking' covers any entity engaged in an economic activity that offers goods or services in a given market. In the UK, Chapter I of the Competition Act 1998 governs prohibitions that fall within the category of cartels of which price-fixing, market or customer sharing, agreements to restrict production or supply, and bid-rigging are the most serious 'hard-core cartels'. This study evaluates the efficacy of the Leniency Programme in the enforcement of competition law applied in respect of cartel infringements based on cases decided by the UK's principal enforcement authority. Chapter I cases decided and published over a twelve-year period, since the Competition Act 1998 came into force, have been analysed in order to evaluate whether the leniency programme has been an incentive for colluders to apply for leniency. The results indicate that very few leniency applications were submitted voluntarily before an investigation was begun by the enforcement authority. Moreover, the detection rate of Chapter I cases on average has been very low over the twelve-year period, less than 2 cases per year, excluding settlements. The research also shows that contrary to the accepted view that evidence relating to cartels is difficult to find, cartels studied in this thesis have left a trail of both electronic, and other evidence that the authorities were able to seize. Further, the leniency applicants were not always reliable witnesses, and despite leniency, the enforcement authorities had to conduct lengthy investigations, negating the cost saving assertion and taking resources away from ex officio interventions by the authorities. The conclusion drawn from this study is that rather than enhancing detection and deterrence of anticompetitive behaviour by undertakings, the leniency programme overlaps, and in effect, undermines the public enforcement of competition law in the UK.

Abstract The thesis is trying to find out if Czech republic disposes really big companies in the manufacturing industry and analyze attitude of czech government towards important companies. Situation in Czech republic compares with Finland and Slovakia. Theoretical part describes certain types of market structures and their effect to competition. Reports competition concepts by chosen economic schools as well as antitrust policy and unfair competition. In the end it shows company types by size and interest groups that are connected not only with big companies. Analytical part research market concentration in czech manufacturing industry with special focus on market concentration -- company size relationship. Following part compares world largest companies with biggest czech, slovak and finnish ones. Last part points government attitude towards big companies by examples Škoda Auto, a.s., ČEZ, a.s., Slovenský plynárenský priemysel, a.s. and Nokia.

Merger reviews are institutionalized and customized analyses of mergers and acquisitions by antitrust authorities which result in approvals or disapprovals of the strategic intents of firms. In view of the wide variety of agents whose lives may be changed by a merger review, the fact that different stakeholders might induce a government intervention on a particular deal, and the central role of antitrust commissioners in this context, the general aim of this thesis is to examine the determinants of merger review decisions, but particularly those related to commissioners\' personal attributes, values and interests. Additionally, some structural and procedural issues contained in the antitrust regulatory sphere as well as control variables related to other perspectives of analysis are included as part of this empirical analysis. To achieve the mentioned general objective and other specific goals, a unique dataset was built that covers a fourteen-year period of competition regulation in Brazil. The sample of this study comprises 30,543 votes by 36 different panel members on 5,091 transactions examined through ordered probit models. This thesis, mainly, reveals that \'political ideology\', \'prior work experience in the public service\' and \'human capital\' of antitrust commissioners, in addition to the size of commissions\' voting panels, affect consistently merger review verdicts. In short, under the PSDB presidential administration, for example, transactions were less challenged in Brazil. Regarding the \'public service experience\', commissioners who have predominant prior job or professional association in Education, Health and Social areas, inversely to \'political ideology\', increase the likelihood of high levels of intervention in private deals. Additionally, commissioners\' accumulated skills and knowledge - the \'human capital\' - also affect positively law enforcement on merger reviews. The implications of this particular contribution to public administration follow the same path of \'public service experience\': if societies do not pressure politicians to improve public service, considering not only a remarkable knowledge in Law or Economics to appoint a commissioner, but having a broader view of individuals\' motivations and claims, interferences between \'concepts, principles and norms\' stated in laws, and law enforcement will continuously occur. The last consistent result shows that the likelihood of the Brazilian authority to impose significant changes to firms decreases the greater the voting panel. Thus, this thesis suggests to antitrust policymakers that wide ranges of minimum and maximum quorum in voting panels must be avoided. To the best knowledge of this thesis author, there is not any past research that found such results. It means a unique contribution to the antitrust and management literatures. / Atos de concentração são processos de análise institucionalizados e customizados de fusões e aquisições, realizados por autoridades antitrustes, que resultam na aprovação ou bloqueio dos intentos estratégicos das firmas. Em vista da grande variadade de agentes cujas vidas podem ser afetadas pelos atos de concentração, do fato de que diferentes agentes podem induzir uma intervenção do governo em uma transação específica e o papel central dos conselheiros antitruste neste contexto, o objetivo geral desta tese é examinar os determinantes das decisões de uma autoridade antitruste sobre atos de concentração, mas particularmente os determinantes relacionados aos atributos pessoais, valores e interesses dos conselheiros. Adicionalmente, alguns fatores contidos na esfera regulatória antitruste são considerados nesta análise empírica. Para que o objetivo geral mencionado e outros específicos sejam alcançados, um banco de dados único foi construído e cobre um período de catorze anos de regulacão no Brasil. A amostra deste estudo, então, contém 30,543 votos de 36 diferentes membros do CADE sobre 5,091 transações. Modelos probit ordenados são usados para a análise dos dados. Esta tese, principalmente, revela que \'ideologia política\', \'experiencia prévia de trabalho no setor público\' e \'capital humano\' dos conselheiros antitruste, somando-se ao tamanho do plenário votante, afetam consistentemente os veriditos de atos de concentração. Em resumo, sob a administração federal do PSDB, por exemplo, as transações foram menos alteradas no Brasil. Quanto à experiencia no serviço público, os conselheiros que tiveram atuação profissional predominante nas áreas de Educação, Saúde e Assistencia Social, inversamente à \'ideologia polítical, aumentam a probabilidade de altos níveis de intervenção estatal em acordos privados. Adicionalmente, habilidades e conhecimento acumulados dos conselheiros, o chamado \'capital humano\', também afetam positivamente o nível de emprego da lei em atos de concentração. As implicações destes achados para a administração pública seguem um mesmo caminho: se a sociedade não pressionar os politicos a aperfeiçoarem o serviço público, considerando-se não somente o notável saber jurídico ou econômico para a nomeação de um conselheiro, mas tendo uma visão mais ampla das motivações e pretensões dos indivíduos, interferências continuarão a existir entre \'conceitos, principios e normas\' anunciados pela lei e a lei aplicada. Por fim, como último resultado consistente, a probabilidade de que a autoridade antitruste Brasileira imponha mudanças significativas às firmas decresce à medida que os conselheiros habilitados para votar são mais numerosos. Portanto, esta tese sugere aos formuladores de políticas que sejam evitados intervalos largos entre o mínimo e o máximo de votantes.

Merger reviews are institutionalized and customized analyses of mergers and acquisitions by antitrust authorities which result in approvals or disapprovals of the strategic intents of firms. In view of the wide variety of agents whose lives may be changed by a merger review, the fact that different stakeholders might induce a government intervention on a particular deal, and the central role of antitrust commissioners in this context, the general aim of this thesis is to examine the determinants of merger review decisions, but particularly those related to commissioners\' personal attributes, values and interests. Additionally, some structural and procedural issues contained in the antitrust regulatory sphere as well as control variables related to other perspectives of analysis are included as part of this empirical analysis. To achieve the mentioned general objective and other specific goals, a unique dataset was built that covers a fourteen-year period of competition regulation in Brazil. The sample of this study comprises 30,543 votes by 36 different panel members on 5,091 transactions examined through ordered probit models. This thesis, mainly, reveals that \'political ideology\', \'prior work experience in the public service\' and \'human capital\' of antitrust commissioners, in addition to the size of commissions\' voting panels, affect consistently merger review verdicts. In short, under the PSDB presidential administration, for example, transactions were less challenged in Brazil. Regarding the \'public service experience\', commissioners who have predominant prior job or professional association in Education, Health and Social areas, inversely to \'political ideology\', increase the likelihood of high levels of intervention in private deals. Additionally, commissioners\' accumulated skills and knowledge - the \'human capital\' - also affect positively law enforcement on merger reviews. The implications of this particular contribution to public administration follow the same path of \'public service experience\': if societies do not pressure politicians to improve public service, considering not only a remarkable knowledge in Law or Economics to appoint a commissioner, but having a broader view of individuals\' motivations and claims, interferences between \'concepts, principles and norms\' stated in laws, and law enforcement will continuously occur. The last consistent result shows that the likelihood of the Brazilian authority to impose significant changes to firms decreases the greater the voting panel. Thus, this thesis suggests to antitrust policymakers that wide ranges of minimum and maximum quorum in voting panels must be avoided. To the best knowledge of this thesis author, there is not any past research that found such results. It means a unique contribution to the antitrust and management literatures. / Atos de concentração são processos de análise institucionalizados e customizados de fusões e aquisições, realizados por autoridades antitrustes, que resultam na aprovação ou bloqueio dos intentos estratégicos das firmas. Em vista da grande variadade de agentes cujas vidas podem ser afetadas pelos atos de concentração, do fato de que diferentes agentes podem induzir uma intervenção do governo em uma transação específica e o papel central dos conselheiros antitruste neste contexto, o objetivo geral desta tese é examinar os determinantes das decisões de uma autoridade antitruste sobre atos de concentração, mas particularmente os determinantes relacionados aos atributos pessoais, valores e interesses dos conselheiros. Adicionalmente, alguns fatores contidos na esfera regulatória antitruste são considerados nesta análise empírica. Para que o objetivo geral mencionado e outros específicos sejam alcançados, um banco de dados único foi construído e cobre um período de catorze anos de regulacão no Brasil. A amostra deste estudo, então, contém 30,543 votos de 36 diferentes membros do CADE sobre 5,091 transações. Modelos probit ordenados são usados para a análise dos dados. Esta tese, principalmente, revela que \'ideologia política\', \'experiencia prévia de trabalho no setor público\' e \'capital humano\' dos conselheiros antitruste, somando-se ao tamanho do plenário votante, afetam consistentemente os veriditos de atos de concentração. Em resumo, sob a administração federal do PSDB, por exemplo, as transações foram menos alteradas no Brasil. Quanto à experiencia no serviço público, os conselheiros que tiveram atuação profissional predominante nas áreas de Educação, Saúde e Assistencia Social, inversamente à \'ideologia polítical, aumentam a probabilidade de altos níveis de intervenção estatal em acordos privados. Adicionalmente, habilidades e conhecimento acumulados dos conselheiros, o chamado \'capital humano\', também afetam positivamente o nível de emprego da lei em atos de concentração. As implicações destes achados para a administração pública seguem um mesmo caminho: se a sociedade não pressionar os politicos a aperfeiçoarem o serviço público, considerando-se não somente o notável saber jurídico ou econômico para a nomeação de um conselheiro, mas tendo uma visão mais ampla das motivações e pretensões dos indivíduos, interferências continuarão a existir entre \'conceitos, principios e normas\' anunciados pela lei e a lei aplicada. Por fim, como último resultado consistente, a probabilidade de que a autoridade antitruste Brasileira imponha mudanças significativas às firmas decresce à medida que os conselheiros habilitados para votar são mais numerosos. Portanto, esta tese sugere aos formuladores de políticas que sejam evitados intervalos largos entre o mínimo e o máximo de votantes.

Made available in DSpace on 2016-06-02T19:33:12Z (GMT). No. of bitstreams: 1 CARDOSO_Diego_2013.pdf: 1706794 bytes, checksum: 52ad0ebf4915ad86f6ac9a9529176b01 (MD5) Previous issue date: 2013-05-20 / Financiadora de Estudos e Projetos / The goal of competition policy, also known as antitrust policy, is promoting the welfare and economic efficiency by preserving fair competition in markets. Merger control is one of the main responsibilities of antitrust institutions. Prohibitions and restrictions of merger operations affect market structures, thus making these decisions relevant to economic agents. This Master's thesis analyzes the decisions made by Brazilian antitrust institutions regarding merger processes. Data was collected from public documents issued from 2004 to 2011. Bivariate analysis, discrete choice models and classification decision trees show that these merger control decisions are consistent with Brazilian antitrust law. Consistent competition policy reduces uncertainty, aligns expectations and increases the efficiency of antitrust law enforcement. Therefore, this research contributes to better understanding Brazilian competition policy related to merger control and its decision drivers. / As políticas de defesa da concorrência, ou políticas antitruste, visam ao maior bem-estar social por meio da manutenção de ambientes concorrenciais que promovam a eficiência econômica. No Brasil, os órgãos que compõem o Sistema Brasileiro de Defesa da Concorrência são os responsáveis pelas decisões sobre os agentes econômicos a fim de atingir os objetivos das políticas antitruste. Nesse âmbito, as decisões que influenciam a estrutura de mercados por meio das restrições e vetos a processos como fusões e aquisições de empresas - os julgamentos de Atos de Concentração - apresentam elevada relevância. Este trabalho realiza uma avaliação das decisões do Sistema Brasileiro de Defesa da Concorrência relativas aos Atos de Concentração. Para tal, foram coletados dados a partir dos documentos públicos emitidos pelos órgãos antitruste no período entre 2004 e 2011. Por meio da aplicação de modelos de regressão de escolha discreta e árvores de decisão induzidas, verificou-se que tais decisões são consistentes com as regras antitruste brasileiras. A consistência com regras estabelecidas possibilita uma maior eficiência na aplicação das políticas de defesa da concorrência, uma vez que reduz as incertezas dos agentes econômicos, alinha as expectativas e facilita a condução dos processos. Nesse sentido, esta investigação contribui para uma melhor compreensão dos fatores que influenciam as decisões dos órgãos brasileiros de defesa da concorrência, oferecendo também indicativos que auxiliam na verificação da eficiência da aplicação de tais políticas.

Coordenação de Aperfeiçoamento de Pessoal de Nível Superior / Antitrust authorities and regulatory agencies address competition issues in regulated markets and in this way both may present conflicting and harmonious opinions. Therefore, the application of antitrust policy in regulated markets in Brazil is an interesting object of investigation. Within competitive context, the telecommunications is the industry with the largest presence of these authorities, chiefly within mergers between companies in this sector. Moreover, constant technological innovations and the phenomenon of convergence of technology and services give the telecommunications industry very specific characteristics. Thus, this study intends to examine the application of antitrust policy in the telecommunications industry in Brazil. For this purpose, the study evaluated the performance of the regulator and the antitrust authority in antitrust proceedings within mergers occurring since the installation of the current regulatory framework, between the years 1998 to 2010. Analyses were performed primarily from two perspectives. First, if the understandings of both authorities were in-line with the current reality of the industry, and second, if the rulings of both the antitrust authority and the regulatory agency were consistent. The conclusion is that the understandings still retain certain applicability to current industry realities. There remains a risk, however, of the rulings moving away from the current industry conditions due largely to the rapid changes in technology. As to the consistency between the authorities, the study finds significant agreement, but with differences within interpretations of more complex cases. Finally, the rulings appear to be still very tied to the regulations of the regulatory agency, despite continued questioning from the antitrust authority. This indicates the necessity of a revision of the legal framework and, to some extent, of the institutional model of analysis of antitrust cases. / As autoridades antitruste e as agências reguladoras atuam sobre as questões concorrenciais nos mercados regulados e, desta forma, ambas podem apresentar posicionamentos harmoniosos e conflitantes. Portanto, a aplicação da política de defesa da concorrência brasileira em mercados regulados se mostra como um objeto de investigação interessante. Dentro dessa perspectiva, o setor de telecomunicações é o que apresenta a maior presença das duas autoridades no âmbito concorrencial, em especial nos atos de concentração entre as empresas atuantes no setor. É possível adicionar a esse cenário o forte movimento de constantes inovações tecnológicas e o fenômeno de convergência tecnológica e de serviços, que conferem ao setor de telecomunicações características muito particulares. Desse modo, o trabalho tem o objetivo de analisar a aplicação da política de defesa da concorrência no setor de telecomunicações do Brasil. Para tanto, foi avaliada a atuação da agência reguladora e da autoridade antitruste nos processos de defesa da concorrência do setor de telecomunicações, em especial nos atos de concentração ocorridos entre os anos de 1998 a 2010, ou seja, desde a instalação do atual marco regulatório. As análises foram realizadas basicamente sob duas perspectivas. Primeiro, se os entendimentos de ambas as autoridades estavam em consonância com a atual realidade do setor. Segundo, se os posicionamentos do órgão antitruste e da agência reguladora eram coerentes. A conclusão foi que os entendimentos ainda guardam certa consonância com a realidade, mas correm o risco de se afastarem do atual cenário do setor devido às rápidas mudanças tecnológicas. Acerca da coerência entre as autoridades, percebe-se significativa concordância, mas com divergências nos casos mais complexos. Enfim, os posicionamentos se mostram ainda muito atrelados às regulamentações da agência reguladora, apesar de seguidos questionamentos por parte da autoridade antitruste. Isto indica a necessidade de uma revisão do arcabouço legal e, em certa medida, do modelo institucional de análise dos processos de defesa da concorrência. / Mestre em Economia