DP16705 Assessing EU Merger Control through Compensating Efficiencies

Author(s): Pauline Affeldt, Tomaso Duso, Klaus Gugler, Joanna Piechucka
Publication Date: November 2021
Keyword(s): Compensating efficiencies, Concentration, Efficiency gains, Entry Barriers, HHI, Market Definition, Merger Control, mergers, Screens, Unilateral Effects
JEL(s): K21, L19, L24, L40
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16705

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.