Killer Acquisitions: Evidence from European Merger Cases

Résumé

The killer acquisitions theory states that established firms buy new businesses to pre-empt future competition, particularly in the pharmaceutical and digital industries. The theory fuels demand to make merger policy more restrictive. • But is the theory of killer acquisitions supported by empirical facts? • Focusing on past investigations by the European Commission in information technology industries, this article studies whether acquisitions by large technology companies reduce competition by eliminating future rivalry. • Despite the small sample size, the findings suggest that none of the reviewed transaction was followed by the disappearance of the target’s products, a weakening of competing firms, and/or a post-merger lowering or absence of entry and innovation.