Abstract:
|
Recent years have witnessed an increased interest, by competition agencies, in assessing the competitive
effects of partial acquisitions. We propose a generalization of the two most traditional indicators used
to screen unilateral anti-competitive effects - the Herfindahl-Hirschman Index and the Gross Upward
Price Pressure Index - to partial horizontal acquisition settings. The proposed generalized indicators
are endogenously derived under a probabilistic voting model in which the manager of each firm is
elected in a shareholder assembly between two potential candidates who seek to obtain utility from
an exogenous rent associated with corporate office. The model (i) can cope with settings involving all
types of owners and rights: owners that can be internal to the industry (rival firms) and external to
the industry; and rights that can capture financial and corporate control interests, can be direct and
indirect, can be partial or full, (ii ) yields an endogenous measure of the owners ultimate corporate
control rights, and (iii ) can also be used - in case the potential acquisition is inferred to likely enhance
market power - to devise divestiture structural remedies. We also provide an empirical application
of the two proposed generalized indicators to several acquisitions in the wet shaving industry, with
the objective of providing practitioners with a step-by-step illustration of how to compute them in
antitrust cases. JEL Classification: L13, L41, L66.
Keywords: Antitrust, Partial Horizontal Acquisitions, Oligopoly, Screening Indicators, HHI, GUPPI,
Corporate Control, Banzhaf Power Index |