Why Don't Event Studies Detect the Anticompetitive Effects of Horizontal Mergers?

P. Lasserre (Canada) and M. Souissi (France)


Mergers; Acquisitions; Antitrust policy; Event study.


This paper sheds new light on the reasons behind the failure of previous event studies to nd any anticompetitive effects of horizontal mergers, even those which were challenged by the antitrust authorities. First, we argue that horizontal merg ers, that involve more than one bidder, have the clearest anti competitive potential; therefore we limit the sample to these mergers. Second, we suggest an alternative hypothesis: as a theoretical proposition, multiple-bidder horizontal mergers generate positive abnormal returns to stockholders of the com peting bidders. From a large sample that includes all com pleted US horizontal multiple-bidder mergers between 1980 and 2002, we nd that the observed sequences of abnormal returns around the announcement of mergers follows this par ticular pattern. Our ndings stand in contrast to previous con clusions that competition among bidding rms generates a sig ni cant loss to both successful and unsuccessful bidders.

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