Should competition authorities care about conglomerate mergers?

Please cite the paper as:
Carolina Policarpo Garcia and Paulo Furquim de Azevedo, (2017), Should competition authorities care about conglomerate mergers?, World Economics Association (WEA) Conferences, No. 1 2017, Public Law and Economics, 1st June to 30th June, 2017


Mergers and acquisitions may change competition even when they do not affect market structure, a case known as conglomerate mergers. Competition authorities for a long time have adopted an ambiguous view towards conglomerate mergers, in particular those that are product or market extension mergers (i.e. acquisitions of local firm by a multiunit company that sells the same product in different geographic markets). In this paper, we explore a wave of acquisitions of Higher Education Institutions by educational groups in Brazil, which allow us to disentangle the effects of conglomerate mergers and of horizontal mergers on price, quantity and quality. Our findings show that multiunit organizations are able to increase some quality indicators. As for the effect on price and quantity, results are different. For conglomerate mergers we estimated an increase in the number of freshmen and tuition fees, whereas for acquisitions that leads to horizontal concentration there is no increase in quantity, just in prices. On the whole, our findings are consistent with the hypothesis that multiunit operations increase efficiency, due to scale and scope economies, but that only conglomerate mergers tend to pass on those gains to consumers. We find, though, heterogeneous effects according to the educational group, which still give some leeway for competition authorities to care about conglomerate mergers.

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Recent comments



  • Maria Alejandra Madi says:

    Your paper points out a very interesting discussion about conglomerate mergers and the concerns they arise on competition analysis and regulation.

    I would like you to further analyse

    1. which are the controversies that have arisen among competition economists and competition law experts as of the practice applied
    to conglomerate mergers.
    2. which are the different views on this contoversies among the competition authorities, mainly the Brazilian Comeptition Authority (CADE).

    • Carolina Policarpo Garcia says:

      Dear Maria Alejandra Madi,

      Thank you very much for your relevant and interesting questions. I will do some research on these issues and include a discussion on the paper.

  • Mary Catherine Lucey says:

    Your paper is an interesting one and reminded me of a recent paper presented by Prof Thomas Cheng of Hong Kong University at the most recent conference organised in Hong Kong by Concurrences- One Size Fits All? You might find it rewarding to chase it up as this topic provokes controversy

    • Carolina Policarpo Garcia says:

      Dear Mary Catherine, thank you very much, I’ve already found the paper and really seems close related to mine.

  • Maria Fernanda Madi says:

    Dear Carolina and Paulo,

    Thank you for the very interesting paper.

    Here are some comments, in a perspective of a lawyer, that might be useful for your work or at least give you further perspectives on how the extent of your work to other fields:
    1. I missed in the article the definition of conglomerates. I know that the concept is broad and well-know, however, I think would be nice to have an explanation on why do you focus on this type of mergers, and not the others? How conglomerates are different from other market structures?

    2. Is there any policy implication from your work? Can you give any guidelines to authorities in relation to what to do in case of conglomerate mergers?

    3. How much do you think you can expand your conclusions to other countries or sectors? Do you think that countries that have long-traditions on high-level of educations would present similar results?

    I understand that you have the economic background, and I was honestly impressed with you work, but these are some perspectives as a lawyer/policy maker that can encourage you to open the view on the topic.
    Looking forward to hearing from you,
    Maria Fernanda

    • Carolina Policarpo Garcia says:

      Dear Maria Fernanda,

      It is very enriching see other perspectives to the paper, it brings some new questions, especially from the policy perspective. Please see my answers below.

      1. There is no single definition of conglomerate merger, but it is usually referred to mergers that are nor horizontal neither vertical. In fact, we did not go further with other examples than market extension mergers, we will improve the literature on this issue.
      2. The main policy implication is that not just horizontal and vertical mergers need to be carefully evaluated by competition authorities. It does not mean that conglomerate mergers always have similar effects to other types of mergers. But they also need a deep analysis as horizontal and vertical mergers.
      3. Actually it is a very good question and I don’t have the answer. My thought is that we need other examples to see if results would be similar. An issue that needs to be exploited is if results would be different in cases in which there is no (expected) standardization of products. It is not proved in the paper that results are driven by standardization (which is another issue to be exploited), but it might be the case.

      Thank you very much for your interesting and helpful comments.

      Kind regards,

  • Vicente Bagnoli says:

    Dear Paulo and Carolina,
    It is a very interesting paper to understand the recent movement at the educational market in Brazil, congratulations!
    Considering CADE’s decision on this June 28 denying the merger Kroton/Estácio, a final version of the paper could include a comment on this, maybe in a “pos facio” in order to not interfere in the structure of the paper.
    Another subject that would be interesting to explore is how those conglomerate mergers affect competition on the EaD (“distance learning”) market.
    Best regards,
    Vicente Bagnoli

    • Carolina Policarpo Garcia says:

      Dear Vicente,

      Thank you very much for your comments. Certainly the decision on Kroton/Estácio merger should be mentioned. We also would like to exploit the distance learning market (which had an impressive growth in the last decade, even more than the “in class” courses), but we don’t have enough data to do a similar analysis, we are working on this.

      Best regards,

  • Dr. Thibault S says:

    Dear Paulo and Carolina,

    Thank you for this thought provoking paper.
    I enjoy reading it, I learned a lot but I feel like it would be very helpful to create a new title at the end of it entitled “policies implication” which some very concrete steps for competition authorities to take.

    Thanks again