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Merger control

The European Commission is increasingly relying on the use of econometric analysis in EU merger control. In particular, merger simulation models have been introduced to practical merger control cases as an additional tool to assess expected unilateral effects.

Merger simulation models predict post-merger prices based on information about a set of pre-merger market conditions and certain assumptions about the behavior of the firms in the relevant market. The estimation of demand or price elasticities is the central step in the assessment of merger effects. Indeed, elasticities reflect the degree of substitutability of one good for another and are useful to estimate the proportion of a brand’s sales that would be diverted to competing brands in the case of an increase in the price of that brand.

EE&MC has considerable know how on merger simulation models and demand functions.

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