Vertical Mergers: A Survey of Ex Post Evidence and Ex Ante Evaluation Methods
- PDF / 650,405 Bytes
- 19 Pages / 439.37 x 666.142 pts Page_size
- 67 Downloads / 175 Views
Vertical Mergers: A Survey of Ex Post Evidence and Ex Ante Evaluation Methods Margaret E. Slade1 Accepted: 16 October 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract This article surveys recent empirical evidence on efficiencies and competitive harm that are associated with vertical mergers. It discusses both ex post or retrospective empirical studies that rely on post–merger data and ex ante or forecasting techniques that use premerger data. It develops the idea that although there is a need for vertical merger screening tools there are a number of problems that are associated with attempts to adapt horizontal screens to the vertical context. Mergers in the technology, media, and telecom sectors are emphasized because they tend to dominate contested vertical mergers. Keywords Antitrust policy · Empirical evaluation · Empirical evidence · Vertical mergers
1 Introduction Over time, mergers have grown in size and become more international. Moreover, the developed countries have moved from industrial economies — with giant firms such as Standard Oil, US Steel, and American Tobacco that produce physical products — to knowledge economies — with giant firms such as Amazon, Microsoft, Facebook, and Google that perform computer-based services. Furthermore, whereas competitive concerns that involved the former industries were most often horizontal, some of the most publicized concerns that involve the latter industries are vertical. High profile vertical mergers — such as AT&T/Time Warner, Nielsen/Arbitron, Comcast/NBCU, Ticketmaster/Live Nation and Broadcom/Brocade — have focused attention on the possibility of harmful vertical mergers. Since the technology, media, and telecom sectors dominate the list of today’s largest companies, it is not
* Margaret E. Slade [email protected] 1
Vancouver School of Economics, The University of British Columbia, 6000 Iona Drive, Vancouver, BC V6T 1L4, Canada
13
Vol.:(0123456789)
M. E. Slade
surprising that those firms also dominate the list of today’s largest and most controversial vertical mergers. Relationships between upstream and downstream firms have been hotly contested. Indeed, opinions range from the position that all vertical mergers and restraints are efficient and should therefore be per se legal to a much more skeptical view that foreclosure, entry deterrence, and other anticompetitive motives lie behind most of those arrangements. Furthermore, policy makers are hampered by the fact that the findings from both theoretical models and empirical assessments of those models are most often ambiguous and, even when conclusions are reached, they are apt to be weak. In order to assess the tradeoff between vertical efficiencies and competitive harm, this article first examines recent empirical research that attempts to evaluate vertical mergers and integration. That evidence is retrospective in the sense that it relies on post–merger data. When a merger is proposed, however, competition authorities must have screening and evaluation techni
Data Loading...
