Merger Effects and Antitrust Enforcement: Evidence from US Consumer Packaged Goods
We document the effects of a comprehensive set of mergers of US consumer packaged goods manufacturers on prices, quantities, and product assortment. Across a range of specifications, we find a small average price effect of mergers (-0.6% to 1.6%) but substantial heterogeneity in effects, with a standard deviation between 5.3–6.7 pp. Through a model of enforcement, we find that agencies challenge mergers they expect would increase prices more than about 4%–8%. Modest increases in stringency would reduce prices and the prevalence of completed price-increasing mergers, with minimal impacts on blocked price-decreasing mergers, at a significantly greater agency burden.
Non-Technical Summaries
- Mergers can increase prices if the merging parties gain market power due to the deal. They can decrease prices if the union induces cost...
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