Publisher:
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract:
We analyze horizontal mergers when the acquirer holds a passive partial ownership stake (PPO) in the target firm prior to the merger. We show that a PPO reduces the minimal synergy level necessary to make a merger beneficial for consumers. It follows that an antitrust authority ignoring existing PPOs when evaluating merger proposals (which reflects the current EU merger control regime) invites sneaky takeovers: Acquiring firms strategically use PPOs prior to a full merger proposal to get mergers approved which are, in fact, detrimental to consumers.