The Research On Unilateral Effects Of Horizontal Mergers

In the purpose of growth rapidly and expanding the market influence, more and more company take the way of horizontal mergers. Since some times the horizontal merger maybe lead to adverse competitive effects, human start to take care of this kind of merger and antitrust department start to regulate the horizontal merger. There are two kinds of potential adverse competitive effect of merger, one is coordinate interaction, the other is unilateral effects. The coordinate interaction has been written into merger guidelines is much earlier than the latter and this theory is also much more consummate. However, compare with coordinate interaction unilateral effects will be a much good evidence in the litigation, for the coordinate interaction just a kind of guess. So unilateral effects have become a prevalent question. And antitrust regulation also force on this point. Although the theory and analytical method of unilateral effects is improving, there are still some controversies and need to do much more works. In the other aspects, antitrust department of our country start to do horizontal merger just several years and have published some laws and regulations that is a good beginning, so as a point of horizontal merger regulation , the unilateral effects worth proceeding research.In this article, we talk about why horizontal merger maybe lead to unilateral effects at first, we go on to introduce how to analyse the effects, then enumerate some case of American mergers control. The part of theory analysis include two aspects, quantity competition and price competition. We analyse the quantity competition on the base of Cournot model, the result imply that the horizontal merger will lead to a higher price and low quantity, especially in the case of leading to monopoly; even if the demand function changes, it can affect the number of the results, but can not reverse the results; the impaction of efficiency can alleviate the unilateral effects; the market entering will generate some adverse effect for improving price, but if entering without profit the entering will not happen. we analyse price competition on the base of Betrand model ,since in the case of price competition, the actions of compete firm will be strategic complements, that is the un-merge firms will raise price when the merged firm raise price. In the case of quantity competition, the firms acting strategic substitutes, that is the non-merger firms will improve quantity when merged firm improve quantity. So if the firms acting price competition, the unilateral effects will be much big. The bigger the difference of product ,the price will be higher .the more consumer who take the merger firms'production as the first or second chose, the price will be higher. And then we introduce the anaylysis methods. The first is market definition and structure presumption. In the relevant market the merged firm would impose at least a"small but significant and nontransitory". increase in price, assuming the terms of sale of all other products are held constant. A relevant market is a group of products and a geographic area that is not bigger than necessary to satisfy this test. And then set safe harbour according to the market concentration. Can we find out the firm with strong market power by this way. At last we also still need to consider some other factors that will affect unilateral effects. The second is merger simulation, this method is much fitter for the different products. In this part we still introduce Cournot simulation and Betrand simulation. The detail process is setting the demand function and supply function, and then calibrating the models, compare the result of between pre-merger and after merger. The third methd is UPP( net upward pricing pressure),we consider the upward pricing pressure and downward pricing pressure after merger, compare the two aspects. Although this method have not been used in the practice, it has many advantage such as simple, convenience , transparence and so on. In the next part we give some cases in order to observe how to analysis the specific case.After the full analysis , we list the detail process about how to investigate the unilateral effects that result from horizontal mergers on the base of our country's laws and regulations.