Mueller, Dennis C. --- "Efficiency versus Market Power through Mergers" [2004] ELECD 178; in Neumann, Manfred; Weigand, Jürgen (eds), "The International Handbook of Competition" (Edward Elgar Publishing, 2004)

Book Title: The International Handbook of Competition

Editor(s): Neumann, Manfred; Weigand, Jürgen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843760542

Section: Chapter 2

Section Title: Efficiency versus Market Power through Mergers

Author(s): Mueller, Dennis C.

Number of pages: 23

Extract:

2 Efficiency versus market power through
mergers
Dennis C. Mueller



1 Introduction
The 20th century began with the first great merger wave in the United States
and the United Kingdom. It ended with another great wave that engulfed
virtually every developed country in the world. As befits a global economy,
many of the mergers taking place at the end of the century were cross-border
deals. In between these two great waves there were three additional waves in
the United States at the end of the 1920s, 1960s and 1980s. These mergers
have obviously transformed the companies involved in them. In 1950, Philip
Morris was a relatively non-leading, specialized company in the tobacco
industry. Later it became the largest cigarette producer in the world, thanks
to its introduction of the Marlboro brand in the mid-1950s, and the world's
leading retail food manufacturer, thanks to its many acquisitions over the
years, including in particular its acquisitions of food company giants Kraft
Foods and General Foods. Other than changing the shapes and sizes of
the merging companies, what have been the effects of the many thousands
of mergers that have occurred in the United States and increasingly in all
corners of the globe and, in particular, what have been their effects on
efficiency and market power?
This would seem to be the most obvious and important question to
ask about mergers both with respect to our understanding of the merger
process and for the design of merger policy. Unfortunately, ...