Merger Policy at the Margin: Western Refining’s Acquisition of Giant Industries

Posted by D. Daniel Sokol

Nicholas Kreisle, U.S. Federal Trade Commission – Bureau of Economics discusses Merger Policy at the Margin: Western Refining’s Acquisition of Giant Industries

ABSTRACT: In May 2007 the Federal Trade Commission failed to win a preliminary injunction in U.S. District Court that would have blocked the merger of two refiners that served Albuquerque, NM and surrounding areas. This study compares estimates of the post-merger price effect to the price effects predicted by economic experts on both sides of the case. I find little scope to interpret the evidence as consistent with an anticompetitive post-merger price effect. I also highlight difficulties involved in econometrically identifying small effects even with an abundance of pricing data.