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  5. Global Giants and Local Stars: How Changes In Brand Ownership Affect Competition

Global Giants and Local Stars: How Changes In Brand Ownership Affect Competition

  • Vanessa Alviarez
  • Keith Head
  • Thierry Mayer
American Economic Journal: Microeconomics (Forthcoming)

Abstract

Large beer and spirits makers expanded abroad mainly by acquiring local brands. Exploiting market share data in 76 countries and changes in brand ownership from 2007 to 2018, we estimate that owners matter little for brand performance, except via a negative consumer response to foreign ownership. Our counterfactuals indicate that market power increases were large enough to yield higher profits for the majority of mergers without relying on fixed-cost savings. Emulating pro-competition policies used by the US and EU could have saved South American consumers up to 18%. US beer prices would be 3–4% higher without DOJ-enforced divestitures.

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