Chiara Fumagalli, Massimo Motta, Emanuele Tarantino, 27 March 2022

The acquisition of potential competitors is a widespread phenomenon. This may be anti-competitive, as the incumbent kills off potential future competition, or welfare-improving, such as by easing financial constraints for the target. This column provides a framework to trade-off these effects. The authors find that antitrust agencies should prohibit takeovers whose transaction price is particularly high, as the high price signals that the takeover is not indispensable to the target firm’s success. This provides support for the proposals made by antitrust agencies to revise the current laissez-faire approach to mergers in digital markets.

Cristina Caffarra, Gregory Crawford, Tommaso Valletti, 11 May 2020

Cristina Caffarra, Tommaso Valletti, 04 March 2020

Elena Argentesi, Paolo Buccirossi, Emilio Calvano, Tomaso Duso, Alessia Marrazzo, Salvatore Nava, 04 March 2020

Dominant companies in the digital market may use merger and acquisitions – especially ‘killer’ or ‘zombie’ acquisitions – and the (under)enforcement of merger control to stifle competition and cement their market dominance. This column analyses acquisition activity by Amazon, Facebook, and Google between 2008 and 2018, and finds that they often targeted very young firms. Because the evolution of young firms is still uncertain, it is difficult for competition authorities to assess the effects of these mergers, especially when the focus is on single acquisitions without considering the overall acquisition strategy.

Alex Edmans, Vivian Fang, Allen Huang, 07 November 2017

Worries about the dangers of short-term incentives for CEOs are rarely backed by rigorous evidence. This column uses data over a ten-year period to show that short-term contracts lead CEOs to undertake repurchases and M&A activity that have negative long-term consequences. The results suggest that the horizon of CEO incentives is a more important dimension to reform than the size of pay packets.

Farid Toubal, Bruce Blonigen, Lionel Fontagné, Nicholas Sly, 15 August 2014

The concerns of economic nationalists about cross-border takeovers are rooted in the idea that foreign enterprises extract the most valuable assets from top performing domestic firms. Practical concerns about economic efficiency of cross-border M&A markets hinge on whether takeovers transfer underperforming domestic economic resources toward more productive uses at foreign enterprises. How then to reconcile these concerns when forming policies about cross-border activity? It’s all in the timing.


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