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Threatening to buy : Private equity buyouts and antitrust policy

Norbäck, Pehr Johan ; Persson, Lars LU and Tåg, Joacim LU orcid (2018) In Economics Letters 164. p.31-34
Abstract

Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise merger-stable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable – but consumer surplus-enhancing – mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.

Please use this url to cite or link to this publication:
author
; and
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Antitrust policy, M&As, Private equity, Temporary ownership, G32, G34, L13, L22, L40
in
Economics Letters
volume
164
pages
4 pages
publisher
Elsevier
external identifiers
  • scopus:85044677128
ISSN
0165-1765
DOI
10.1016/j.econlet.2017.12.027
language
English
LU publication?
no
id
515b61f2-59a8-4192-ac73-55745c060770
date added to LUP
2020-01-23 15:51:47
date last changed
2022-03-18 07:13:20
@article{515b61f2-59a8-4192-ac73-55745c060770,
  abstract     = {{<p>Private equity firms (PE firms) have become common owners of established firms in concentrated markets. We show that the threat of a PE acquisition can trigger incumbent mergers in an otherwise merger-stable industry. This can help antitrust authorities maximize consumer surplus because previously privately unprofitable – but consumer surplus-enhancing – mergers now take place. We thus predict that merger waves among incumbents should follow the development of a local PE industry.</p>}},
  author       = {{Norbäck, Pehr Johan and Persson, Lars and Tåg, Joacim}},
  issn         = {{0165-1765}},
  keywords     = {{Antitrust policy; M&As; Private equity; Temporary ownership; G32; G34; L13; L22; L40}},
  language     = {{eng}},
  month        = {{03}},
  pages        = {{31--34}},
  publisher    = {{Elsevier}},
  series       = {{Economics Letters}},
  title        = {{Threatening to buy : Private equity buyouts and antitrust policy}},
  url          = {{http://dx.doi.org/10.1016/j.econlet.2017.12.027}},
  doi          = {{10.1016/j.econlet.2017.12.027}},
  volume       = {{164}},
  year         = {{2018}},
}