This paper studies the incidence and impact of bilateral redeployment of resources between target and acquiring firms following 253 horizontal acquisitions involving North American and European firms between 1988 and 1992. The resources include ten types of technical, commercial, administrative and financial resources. We find that acquisitions often involve substantial technical and commercial integration of the resources of the acquirer and target, while representing managerial and financial expansion of the acquirer rather than the target. In turn, we show that bilateral redeployment improves five types of capabilities of the acquiring and target businesses, including R&D capabilities, time to market, product quality, product cost and output flexibility. The empirical implications support the conceptual argument that acquisitions play a key role in business adaptation. I 1

The objective of this paper is to investigate the determinants of EU merger control decisions. We consider a sample of 164 EU merger control decisions and evaluate the anti-competitive consequences of these mergers from the reaction of the stock market price of competitors to the merging firms. We then account for the discrepancies between the actual decisions and what the stock market would have dictated in terms of the political economy surrounding the cases. Our results suggest that the commission’s decisions cannot be solely accounted for by the motive of protecting consumer surplus. The institutional and political environment does matter. As far as firms ’ influence is concerned, however, our data suggests that the commission’s decisions are not sensitive to firms ’ interests. Instead, the evidence suggests that other factors – such as country and industry effects, as well as market definition and procedural aspects – do play significant roles.

This paper surveys some potential costs and benefits of increased concentration in agricultural markets in the context of an economic trade-off. The existing industrial organization literature is applied to agricultural markets to provide a more concrete structure for analysis. Although an important part of the debate, market power and the existing empirical literature measuring it are only part of a complete picture and suggestions are made on where this literature could go to increase its impact. Policy frameworks are examined to provide perspective and applications.

Firms differ in their integration capability, which is the ability to absorb and manage businesses on a continuing basis. We expect integration capability heterogeneity to influence acquisition strategy by profit-seeking firms, affecting both their propensity to acquire and the types of businesses that they target. We argue that a firm’s integration capability increases with its product line scope and test two hypotheses: (1) firms with greater existing product line scope are more likely to be acquirers; and (2) firms with greater product line scope are more likely to purchase product lines that they already operate. Data from the U.S. medical sector between 1978 and 1995 support hypothesis 1. We then find that all firms tended to purchase product lines that they did not previously operate, but, consistent with hypothesis 2, that firms with greater product line scope made acquisitions that had greater overlap with their existing product lines. The results are analogous with the biological observation that the most successful predators are better able to target desirable prey as well as being better able to overpower the prey they target.

The purpose of this report is to contribute to the analysis of two questions. Should a merger control system take into account efficiency gains from horizontal mergers, and balance these gains against the anti-competitive effects of mergers? If so, how should a system be designed to account for efficiency gains? The report is based on a report to the European Commission. To help answer the two questions we start with an extensive review of the relevant economic research, including both theoretical and empirical studies of mergers and merger control. Next, we review the current legal practice in seven OECD jurisdictions. Finally, we propose a merger control system, emphasising the central role of informational limitations. Based on our conclusions from the empirical literature that efficiencies may need to be assessed on a case-by-case basis, we construct an information-economising twostage decision framework for evaluating mergers. In a first stage, notified mergers are assessed using routine tools with modest information requirements. Mergers that do not pass the first stage test are subject to further investigation, including an efficiency

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Research in the strategy and international business literatures shows that firms often undertake acquisitions in order to exchange resources. The core arguments arise from theories of market failures, where market failures can stem from potential opportunism or from coordination difficulties. However, empirical research on cross-border and domestic acquisitions has not been able to reach a consensus regarding post-acquisition strategy and performance in the two types of cases. We show that the post-acquisition performance of acquisitions in both domestic and crossborder contexts varies with the extent of post-acquisition redeployment, which in turn depends on two factors, including the degree of asymmetry in the resource profiles of the firms and the extent of context-specificity of these resources. We undertake the analysis at a particularly fine-grained detail of analysis, examining four dimensions of resource asymmetry, as well as five dimensions of business performance. 1 This paper studies post-acquisition resource redeployment between target and acquiring businesses, comparing cross-border and domestic horizontal acquisitions. Acquisitions offer the potential to create value at the target and acquiring firms in both domestic and cross-border contexts. The value creation often stems from two conditions, concerning resource asymmetry and contextual similarity. First, post-acquisition resource redeployment allows firms to take advantage of asymmetries of the target and acquiring firms (Singh and Montgomery, 1987; Lubatkin and O'Neill, 1988; Hitt, Hoskisson, & Ireland, 1994; Nakamura, Shaver and Yeung, 1995). Second, contextual similarity will ease resource redeployment to and from target and acquiring firms (Kogut and Zander, 1993; Brannen, Liker, and Fruin, 1998)....

Why do regulatory authorities scrutinize mergers and acquisitions? The authorities themselves claim to be combating monopoly power and protecting consumers. But the last two decades of empirical research has found little supporting evidence for such motives. An alternative is that M&A regulation is actually designed to protect privileged firms. We provide a test of protectionism by studying whether European regulatory intervention is more likely when European firms are harmed by increased competition. Our findings raise a suspicion of protectionist motivations by the European regulator during the nineties. The results are robust to many statistical difficulties, including endogeneity between investor valuations and regulatory actions. 1 By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good wine can be brought from foreign countries.

Appendix I- A review of the literature on the ex-post assessment of merger decision I.1 In this Appendix we review the economic t literature on the subject of expost review of the effectiveness of competition law enforcement, and in particular of ex-ante merger control rules. I.1 The debate spurred by the Crandall-Winston paper I.2 Much of the recent debate on the need to perform an ex-post assessment of the effectiveness of the antitrust law enforcement has been spurred by a provocative paper by Crandall and Winston (2003). In this paper the authors offer a rather pessimistic view on the impact of the US antitrust policy on consumer welfare. Crandall and Winston review some literature on monopolization, collusion, and mergers enforcement and conclude that in all these areas the effect for consumers has been negative. I.3 Their assessment of the welfare consequences of the enforcement of the merger control regulation in the US is largely based on a model in which

-Deputy Director for Antitrust