Mergers and acquisitions are an important part of the market economy. They often create efficiencies, allow companies to enter new markets, and benefit consumers. But if a merger threatens healthy competition in the market, authorities become concerned.
Economics has a clear role to play in mergers, providing a solid framework of analysis for real-world business.
Oxera works in close collaboration with companies seeking approval with minimal disruption and the fewest concessions. We also work with competition authorities to understand the impacts of a merger on the wider sector.
‘‘We provide our clients with peace of mind.’’
In this Q&A, Oxera economic experts discuss the success stories and key issues our clients face in mergers
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The skills we apply to mergers

Which markets do the merging parties operate in? How closely do the merging parties compete with each other? Does the merger result in a lessening of competition? Are there merger efficiencies?

Theory
With an excellent knowledge of how firms interact, we are on top of all the economic theories around why mergers can be good for consumers and why they can be harmful. These theories are grounded specifically in game theory, industrial organisation, bargaining theory, microeconomics, and behavioural economics.

Legal
We have complete understanding of relevant applicable law and case law—we operate in the real world and are aware of constantly updating precedents and legal constraints.

Management and communications
Applying the best of our management and communications skills, we’re committed to meeting tough deadlines, effective project and people management, and interpersonal skills, whether these involve convincing CEOs of our arguments or convincing operational staff that we’re really there to help, not hinder.

Data-handling
Mergers involve a lot of data processing, requiring exceptional quantitative skills. Some of it is simply formal (creating tables of market shares) and some requires state-of-the-art econometric analysis. We often have to compile extensive data to get the deal through and usually find ways to make this knowledge useful to the progress of the business beyond the merger itself.

Our working process

We take a two-stage process to mergers

Stage 1

Preparation

  • Provide pre-filing, pre-merger advice, forming a preliminary assessment with the positives and negatives, strengths and weaknesses of the merger.
  • Help clients with strategic advice to understand which potential pitfalls may prevent clearance from the authorities.
  • Prepare the client with an understanding of their team and time commitments to the process.

Stage 2

If the merger proceeds

  • We act as the intermediary between the authorities and the business alongside the lawyers. We engage with the case team at the authority and provide supporting economic evidence.
  • Translating what the form is asking into plain English so the client understands what is required.
  • Filing the EU merger application form with the competition authorities to the highest standard.
  • Providing continuous support throughout, with the aim of clearance without concessions.

Liberty Global

Client: Liberty Global
Result: Phase II clearance with limited remedies

Client: Liberty Global

Result: Phase II clearance with limited remedies

Liberty Global undertook a €9 billion merger with Ziggo in the Netherlands, through its Dutch subsidiary UPC NL. The transaction involved both horizontal and vertical issues as the parties integrated their cable networks and pay-TV channels.

The transaction was subject to a Phase II merger review by the European Commission.

Oxera advised Liberty Global throughout pre-notification and both phases of the merger review process. We combined sound economic reasoning with supporting evidence from market data to help build a compelling case before the European Commission and avoided a Statement of Objection being issued.

Our empirical approach helped the Commission’s Chief Economist’s team to dismiss several theories of harm.

We combined the parties’ own internal data with industry monitor reports to provide the evidence needed to address the European Commission’s competition concerns, helping Liberty Global to avoid a Statement of Objections and achieve conditional clearance with a minimum of remedies.

‘We enjoyed working with the Oxera team given a positive outcome and a good cooperation. Oxera was able to connect to our business and produce economic submissions that were both rigorous and intuitive.’

Maurice de Valois Turk
Director, Regulatory Economics, Liberty Global

Oxera: respected adviser in infrastructure transactions
We work with many different clients from all over the world, across a range of sectors, which include: