Economic Effects of Antitrust Laws on Mergers and Acquisitions

Lessambo, Felix I.

doi:10.1007/978-3-030-43558-5_2

Felix I. Lessambo²

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Abstract

The absence of a consensus as to the meaning of the pursued goal (s) at the center of the antitrust enforcement leads to an insecurity. While many enforcement agencies claimed that the consumer protection shall be the ultimate goal under the competition review, most of them do not specifically define consumer welfare and appear to have different economic understandings of the term. The megamergers that have taken place over the past 30 years in pharmaceuticals, among/between big airlines, or big banks have not improved customers’ welfare. Instead, some megamergers like AT&T and Time Warner have crushed customer welfare.

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Notes

1.
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2.
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6.
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7.
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8.
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9.
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10.
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11.
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12.
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13.
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14.
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15.
Idem.
16.
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17.
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18.
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19.
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20.
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21.
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22.
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23.
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24.
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25.
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26.
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27.
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28.
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30.
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31.
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32.
Idem, p. 8.
33.
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34.
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35.
Idem, p. 2261.
36.
Idem, p. 2262.
37.
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38.
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39.
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40.
Idem, Id. 695–96.
41.
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42.
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44.
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45.
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46.
Three rating agencies control 95 percent of the market for rating bonds and other financial instruments: Moody’s, Standard & Poor’s, and Fitch. Four airlines control 80 percent of domestic airline seat capacity. The four largest food companies control 82 percent of beef packing, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of chicken processing. Nearly 90 percent of all internet searches now go through Google.
47.
John E. Kwoka, Jr. (2019): “Does America Have a Monopoly Problem? Examining Concentration and Competition in the US Economy”, Testimony Before United States Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, p. 3.
48.
Microsoft’s acquisition of LinkedIn or Skype, and Facebook’s acquisitions of Instagram and WhatsApp.
49.
John E. Kwoka, Jr. (2019): “Does America Have a Monopoly Problem? Examining Concentration and Competition in the US Economy”, Testimony Before United States Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, p. 5.
50.
Idem, p. 6.
51.
U.S. v. Philadelphia National Bank, 374 U.S. 321 (1963).
52.
John E. Kwoka, Jr. (2019): “Does America Have a Monopoly Problem? Examining Concentration and Competition in the US Economy”, Testimony Before United States Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, p. 12.
53.
John E. Kwoka, Jr. (2019): “Does America Have a Monopoly Problem? Examining Concentration and Competition in the US Economy”, Testimony before United States Senate Committee on the judiciary Subcommittee on Antitrust, Competition policy, and Consumer Rights, p. 8.
54.
U.S. v. Marine Bancorporation, 418 U.S. 602 (1974). It required (a) that the outside firm have the requisite “characteristics, capabilities, and economic incentives,” (b) that the firm be unique or at least one of very few such well-positioned firms, and (c) that there was actual evidence that such a firm had “in fact tempered oligopolistic behavior” by incumbents. The first two of these criteria are unexceptional, but the third proof of actual past effect is quite different than for mergers between incumbents, and far harder to establish.

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School of Business, Central Connecticut State University, New Britain, CT, USA
Felix I. Lessambo

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Lessambo, F.I. (2020). Economic Effects of Antitrust Laws on Mergers and Acquisitions. In: Mergers in the Global Markets. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-43558-5_2

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DOI: https://doi.org/10.1007/978-3-030-43558-5_2
Published: 26 March 2020
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-43557-8
Online ISBN: 978-3-030-43558-5
eBook Packages: Economics and FinanceEconomics and Finance (R0)

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