The Economics of Unilateral and Coordinated Effects in Mergers

Brussels, Belgium
Hosted By: International Business Conferences (IBC)

The assessment of mergers and acquisitions often involves extensive economic analysis, for which antitrust economists have developed sophisticated theories and models of market interaction. Among the key distinctions in merger analysis is the difference between unilateral and coordinated effects.

NERA Associate Director Paul Hofer gave a presentation on the economics of unilateral and coordinated effects in mergers at IBC's annual conference, The Use of Economics in Competition Law, which this year was held on 19-20 March at the Meridien Hotel in Brussels.

Unilateral effects focus on static competition, while coordinated effects take into account dynamic considerations. This framework is by now relatively standard for analyzing horizontal mergers. However, it is also relevant for vertical and conglomerate mergers (as reflected in the European Commission's draft non-horizontal guidelines). In addition to explaining the basic distinction between unilateral and coordinated effects, Mr. Hofer also commented on the latest developments and the most relevant merger decisions of the recent past.

Other topics discussed at the conference included market definition, price discrimination, predation, excessive pricing, and intellectual property. The second day also featured a presentation by NERA Director Dr. Mark Williams on merger simulation models in competition policy.

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