Regulators, firms and information: The domestic sources of convergence in transatlantic merger review

Abstract

ABSTRACT Despite high-profile divergences, competition officials in the European Union and United States frequently state a desire to reach convergent substantive decisions when regulating individual transatlantic merger cases. The extent of transatlantic convergence depends largely on the role of two domestic actors involved in the merger review process: regulators and firms. This article employs two competing approaches (principal–agent and regulatory capture) to assess the ways in which these actors and domestic institutions shape convergence in transatlantic merger review. Empirically, the article investigates the work of the EU–US Mergers Working Group and explores the extent to which it conforms more closely to the preferences of regulators or merging firms. By increasing procedural convergence over information exchanges, the competition regulators increase the likelihood of convergence in substantive decisions, which reduces the likelihood of intervention by political principals. The findings suggest that regulators have used their discretionary authority to overcome domestic political and legal institutions that obstruct information sharing and have reduced the information asymmetry traditionally enjoyed by merging firms. As a result, it is the regulatory agents who have shaped the convergent process via their discretionary authority and captured the merging firms to serve their regulatory interests.