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Title:EU merger control in differentiated product industries PDF Logo
Authors:Mariuzzo, Franco
Walsh, Patrick Paul
Whelan, Ciara
Issue Date:2004
Series/Report no.:CESifo working papers 1312
Abstract:EU Merger Control Regulation No 4064/89 tended to rely on a dominance test, based on the market share of undertakings, to indicate the level and potential changes in market power. The use of such in differentiated product industries is questionable. New EC Merger Regulation No 139/2004 introduces a substantive test to ensure that all post-merger scenarios posing a threat to competition, even amongst small undertakings, are detected. We propose the use of a simple structural approach to undertake a substantive test. We illustrate our point over 28 periods, 178 products (13 companies), for Retail Carbonated Soft Drinks. We estimate company (product) mark-ups using a ?simple? Nested Logit model, Berry (1994) and a more ?sophisticated? model, Berry, Levinsohn and Pakes (1995). While the dominance test may fail to identify damaging mergers in differentiated products industries, this technique will not.
Subjects:market shares
market power
differentiated products industries
mergers
JEL:L40
L81
L25
L11
K2
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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