Mergers, Litigation and Efficiency

Gürtler, Oliver and Kräkel, Matthias (December 2006): Mergers, Litigation and Efficiency. SFB/TR 15 Discussion Paper No. 185

Abstract

We consider antitrust enforcement within the adversarial model used by the United States. We show that, under the adversarial system, the Antitrust Authority may try to prohibit mergers also in those cases in which litigation is inefficient. Even if market concentration and technological disadvantages lead to a significant welfare reduction after merger, from society’s perspective the agency’s lawsuit may be inefficient. We can show that these inefficiencies may be aggravated if the takeover is hostile.

• Item Type: Paper (Discussion Paper)
• Keywords: hostile takeover; litigation contest, merger
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > B4 - Die Gestaltung von Turnieren im Rahmen der Corporate Governance
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: D43, K21, L40
• Language: English