The Short-Run Competitive Effects of Merger Enforcement

"The main purposes of this paper are twofold. On the one hand, we calculate the sign of the effect of merger and phase II announcement (or decision/referral) on merged firms’ stock value, while on the other hand, we investigate the possible short-run effects of the scrutinised mergers on competitors’ stock value. This paper extends the articles of Maynes and Rumsey, Cox and Portes, Duso et al and Barthodly et al by introducing the simple return approach so as to overcome the infrequent trading phenomenon. It also infers short-run outcomes regarding the competitive effects of four major phase II mergers that have been notified to the Hellenic Competition Commission (HCC) during the period 2006–10. Despite its crucial importance, to the best of our knowledge the infrequent trading phenomenon has not been incorporated yet in an event study examination of the competitive effects of mergers on competitor’s stock value. Therefore, we argue that this kind of analysis will create strong benefits for other countries and their competition authorities as well."