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  3. American Economic Review: Insights
  4. June 2019
  5. Stealth Consolidation: Evidence from an Amendment to the Hart-Scott-Rodino Act

Stealth Consolidation: Evidence from an Amendment to the Hart-Scott-Rodino Act

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Abstract

Prospective merger review is the most frequent application of antitrust law. It exempts transactions on the basis of size, though small deals can have large anticompetitive effects in segmented industries. I examine its impact on antitrust enforcement and merger activity in the context of an abrupt increase in the US exemption threshold. I find that among newly-exempt deals, antitrust investigations fall to almost zero while mergers between competitors rise sharply. Effectively all of the rise reflects an endogenous response of firms to reduced premerger scrutiny, consistent with large deterrent effects of antitrust enforcement.

Citation

Wollmann, Thomas G. 2019. "Stealth Consolidation: Evidence from an Amendment to the Hart-Scott-Rodino Act." American Economic Review: Insights, 1 (1): 77-94. DOI: 10.1257/aeri.20180137

Additional Materials

JEL Classification

  • G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
  • G38 Corporate Finance and Governance: Government Policy and Regulation
  • K21 Antitrust Law
  • L41 Monopolization; Horizontal Anticompetitive Practices