Merger Control and Enterprise Competitiveness: Empirical Analysis and Policy Recommendations

This chapter studies the importance of efficiency gains from horizontal mergers. A general theme throughout the chapter is that efficiency gains, and their pass-on to consumers, may vary substantially from merger to merger. For this reason it seems appropriate to reconsider current practice in European merger control, which does not allow the merging parties to appeal to an efficiency defence. We provide a detailed examination of two main parts of an efficiency analysis. The first part of the chapter considers the presence of efficiencies from mergers, with a focus on economies of scale. The second part considers the pass-on of efficiencies to consumers in the form of lower prices. In a final section, we develop an alternative approach based on the concept of the diversion ratio.