Merger Effects and Antitrust Enforcement: Evidence from US Retail
Working Paper 31123
DOI 10.3386/w31123
Issue Date
We document the effects of a comprehensive set of US retail mergers. On average, prices increase by 1.5% and quantities decrease by 2.3%, with significant heterogeneity in outcomes across mergers. Price changes correlate with the screens codified in the Horizontal Merger Guidelines. Through a model of enforcement, we find that agencies challenge mergers they expect would increase average prices more than 8–9%. Modest increases in stringency reduce prices and the prevalence of approved anti-competitive mergers, with minimal impacts on blocked pro-competitive mergers, at a significantly greater agency burden. Our findings inform the debate over whether antitrust enforcement has been lax.
Non-Technical Summaries
- Mergers can increase prices if the merging parties gain market power due to the deal. They can decrease prices if the union induces cost...