A Research On The Efficiency Defense Of M&A From The Perspective Of Economics

Merger control is the nucleus of antitrust law.Analysis from theperspective of economics plays much more important role in the processof antitrust enforcement and policy-making. The very close link betweenthe Industrial Organization theory and antitrust law is much moreobvious in the process of merger control.Over the years,the mainobjective of the antitrust review is the Anti-Competitive Effects arisingfrom the Merger and Acquisition.It initially based on the theory of theStructuralism of Harvard School of The United States. National antitrustauthorities gradually paid more attention to Efficiency factors since1970s,with the development of Efficiency school of the University ofChicago in America.An increasing number of countries allow enterprises to carry outEfficiency Defence, and this content was fixed in the form of legislationor guidelines.In other words,If the merger could bring considerableefficiency improvements, and it could offsets the potentialanti-competitive effects, the original version which was believed to beanti-competition may be approved by the authorities because of theefficiency factor.However,the efficiency defense has become a muchdebated issue in merger policy.When discussing the introduction of an efficiency defense in merger control,it is very important to defineclearly its content and interpretation.On that basis, we can reach moreconsistent conclusions about the specific elements and meanings ofEfficiency Defense.This article uses mathematical analysis, case research method,comparative research method, from the perspective of Economics,using thetheory of Industrial Organization,to analyze and evaluate antitrustPolicy on the efficiency defence relating to mergers andacquisitions.Economic communities have reached mature theoreticalpredictions of anti-competitive effects of the Horizontal Mergers andtheir impact on total social welfares already.Compare to the horizontalmergers, economic analysis of non-horizontal mergers is morecomplicated.As to Non-horizontal mergers,it can improve the economicefficiency by saving transaction costs, eliminating market dualmonopolies;on the other hand,It might also raise monopoly power in themarket, crowding out competitors, even creating market closures.As tobuyer acquisitions, some economists demonstrated that the buyer monopolypower is the third way of monopoly governance, from the buyer perspectiveunder certain conditions, and thus could be able to bring the good newsto consumers. However, other economists prove that, under certainconditions, the arising of buyer’s monopoly power is a huge disastersfor consumers.In terms of policy, this article makes a comparative study ofantitrust policy between the United States and EU,then preliminarilydiscussed the antitrust policy of China (non-horizontal) mergerefficiencies defence from the perspective of industrial organizationtheory, using a case study of Coca-Cola’s taking over of Hui Yuan. Finally,this article formulates policy recommendations for the future of ourcountry antimonopoly policy on the basis of market competition in China with the legislative purpose of China’s anti-monopoly law.