Killer Acquisitions: Evidence from European Merger Cases

Selçukhan Ünekbaş (European University Institute)
Marc Ivaldi (Toulouse School of Economics)
Nicolas Petit (European University Institute)

Abstract

The “killer acquisitions” theory states that established firms buy new businesses to pre-empt future competition, particularly in pharmaceutical and digital industries. The killer acquisitions theory fuels demands for restrictive merger policy. But should merger policy be concerned about killer acquisitions? The answer to that question should depend on empirical facts about the plausibility of the killer acquisitions theory. This paper studies merger control cases to document facts and patterns about killer acquisitions. We focus on transactions reviewed by the European Commission in information and communication technology industries. Pursuant to the theory of killer acquisitions, some of these cases should have led to reduced competition. Focusing on publicly available information through financial disclosures, our analysis suggests that no transaction was followed by the disappearance of the target’s products, a weakening of competing firms, and/or a post-merger lowering or absence of entry and innovation. Skepticism about the killer acquisitions theory should prevail.

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