Unilateral Effects Analysis: The Case of Retail Horizontal Mergers

Posted by Social Science Research Network

Unilateral Effects Analysis: The Case of Retail Horizontal Mergers – Oana Romano (Romanian Competition Council) and Danusia Vamvu (Romanian Competition Council)

ABSTRACT:The use of the Upward Pricing Pressure Test (hereafter referred to as the UPP test or the UPP methodology) for the unilateral effects analysis of merger cases which was developed by antitrust economists Joseph Farrell and Carl Shapiro marks a new era in merger evaluation field and offers a viable alternative to traditional methods. This paper studies the applicability and peculiarities of such a methodology and presents the feasibility of using the UPP test by competition authorities for ex-ante analysis of unilateral effects in retail horizontal mergers. Retail merger cases evaluated by the Romanian Competition Council have shown that competition authorities could rely on UPP and GUPPI methodologies when analyzing the unilateral effects of retail mergers as complying or not with the inequalities as well as information obtained in intermediate stages constitute additional arguments when formulating the decision regarding such mergers.