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  5. Merger Effects and Antitrust Enforcement: Evidence from US Consumer Packaged Goods

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Merger Effects and Antitrust Enforcement: Evidence from US Consumer Packaged Goods

  • Vivek Bhattacharya
  • Gastón Illanes
  • David Stillerman
American Economic Review (Forthcoming)

Abstract

We document the effects of a comprehensive set of mergers of US consumer packaged goods manufacturers on prices, quantities, and product assortment. Across specifications, we find a small average price effect of mergers (-0.5% to 1.1%) but substantial heterogeneity in effects, with a standard deviation between 3.9–7.6 pp. Through a model of enforcement, we find that agencies act as if they challenge mergers they expect would increase prices more than 4.8–6.3%. 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.

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