Analyzing the Efficiency of Competition Policy - Case Study of Procter&Gamble/Gillette merger

Résumé

In 2005, the U.S. competition authority (FTC) investigated the potential effects of a notified merger between Procter&Gamble and Gillette. Their findings indicated a significant lessening of competition on several markets after the merger and FTC therefore imposed a set of structural remedies that aimed at mitigating the merger's negative effects. By using a merger simulation model based on nested-logit estimation of demand, I focus on one of the remedied markets - markets for deodorants - and analyse several possible counter-factual scenarios to the FTC's decision. Results prove FTC's competition concern from unilateral effects, show the effect of other possible structural remedies and also indicate, under what conditions could coordinated effects arise and how these conditions changed by the imposed remedies.