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Related Articles Stealth Consolidation: Evidence from an Amendment to the Hart-Scott-Rodino Act If this is happening in markets across the country, then America’s monopoly problem may be worse than the headline mergers suggest. But they have a big impact in small, local industries like the funeral home business. These smaller mergers may not look big compared to mega-mergers like AT&T-Time Warner and Aetna-Humana. Over the entire period, exempt deals were likely to have consolidated over $400 billion. In the 10 years following the new law, the threshold change concentrated over $50 billion of US output. The divergence indicates that more rivals felt emboldened to attempt mergers. And it’s not just that more rival mergers got past regulators because they weren’t being notified. The divergence between the red and blue line after 2001 is stark. (The data are shifted down so that they are zero when they cross the red vertical line, which marks 2001.) The red line represents mergers between companies who are competing within the same industry, and the blue line represents all other types. It plots the logarithmic number of newly-exempt mergers from 1994 to 2011. Other aspects of the law were relaxed as well, but in practice this threshold was the most important.Īfter the change, notifications and investigations of newly-exempt mergers dropped immediately and dramatically.įigure 3 from Wollmann’s paper shows what happened to mergers that met the reporting requirement before 2001, but slipped under after the law changed. In 2001, that threshold was increased to $50 million. In the simplest terms, the program required that the government be notified when a company with assets over $10 million is bought.
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Since 1976, US antitrust regulators have relied heavily on a premerger notification program to spot anti-competitive takeovers. Īuthor Thomas Wollmann found that when reporting requirements were relaxed, mergers between competitors quickly followed. Smaller mergers that go under regulators’ radar could be playing a big role in concentrating local markets across the country, according to a paper in the June issue of The American Economic Review: Insights. But many industries may be consolidating in a more subtle way. Most of America’s frustration with monopolies gets directed at corporate giants like Facebook and Google.