Mergers And Acquisitions:A Comparative Analysis Of Merger Simulation Models

This graduation thesis under the name of "Mergers&Acquisitions:a Comparative Analysis of Merger Simulation Models" tries to give an overall concept of the reasons why the antitrust authorities control so strictly every single merger happening in every industry and the means they use in order to achieve a fair judgment. Every time a firm expresses the willingness to acquire part or the totality of another firm it has to ask and receive the antitrust approval in order to pursue its goal. On the other side the antitrust authorities have to be sure, before giving the approval, that the competitive landscape, the customers and the overall community will not be, in any way, harmed by the completion of such a deal. Over the chapters of this thesis it will be displayed the meaning of this particular antitrust activity called "Merger Control", the reasons why it is a mandatory step for the achieving of the antitrust approval and some of the latest methods used by the responsible authorities to be sure the merger will not affect competition in a negative way. After will be reported the main problems and effect that being present in a certain market can lead to a serious harm of the competition balance and how these "effects" can be enhanced by the conclusion of a merger deal. They will be differentiated in Unilateral Effects or Non-Unilateral Effects. In the second section it will deal with a particular type of instruments used in the merging control activity. These are the merging simulation models. This models are used beside other better known methods like Herfindahl-Hirschman Index and the SSNIP test for slightly different purposes. The merger simulation models are ran in order to compare prices and their variations between the pre and post-merger landscape in order to assess whether a proposed deal is dangerous for the competition or not. The section will go through three main models the ALM, the AIDS, and the PCAIDS with a particular focus on the last one and its "Nested" version. The third section will present a comparison among the previous models. While the fourth and last section will display a practical application of the PCAIDS model used in order to verify the decision made by the antitrust authorities about two important mergers closed in the 2000 and 2001 in the iron ore industry.