Anti-competitive: Things that Gain from Dispersion - An Application of Synthetic Controls in Ex-Post Merger Analysis

Abstract: This thesis tests how 16 approved mergers which were subjected to an ex-ante investigation by the Swedish Competition Authority (SCA) between 2000-2015 affected consumer prices through a synthetic control methodology. Ex-post assessments of approved mergers' effect on prices are rare due to a lack of adequate controls for non-merger related price fluctuations. We test whether synthetic controls - built upon comparable HICP price data from 30 EU/EFTA countries - can offer a solution. Comparing (1) the price of Swedish markets with large mergers between 2000-2015 and (2) a synthetic control built on prices in the same markets in 29 other EU/EFTA countries (without mergers). As predicted by the Williamson trade-off, our initial results suggest that some mergers resulted in a consumer price decrease, whilst others resulted in a price increase. However, we then subject our results to multiple robustness checks, which most recorded effects fail to pass. Leading us to conclude that the synthetic control method, absent covariates, is not robust enough to measure the price effects of mergers.