Competition Law and Cross-Border Mergers and Acquisitions

• In Event: Competition and Antitrust Policy in International Relations

Abstract

Do host governments favor domestic mergers and acquisitions (M&As) over cross-border M&As? This paper explores a part in the international political economy literature that has been relatively understudied, which is the politics of M&As. I focus on competition laws (or antitrust/antimonopoly law), which governs all M&A activities to assess the level of restrictiveness on foreign firms' domestic market operation. I argue that when applying the competition laws, host governments are more likely to approve domestic M&As than cross-border M&As. By examining the competition laws of thirty-six member states of the Organization for Economic Cooperation and Development at industry-level, I find that competition laws discourage M&As that involve foreign global parents more substantially than M&As that involve domestic global parents. Thus, I conclude that competition laws are a tool the host governments use to protect domestic firms from foreign direct investment.

Author

• Hyeon-Young Ro, Princeton University