Increase In Merger Activity Research Articles

Effects of mergers and acquisitions on food quality

We examine the impact of mergers on product quality in the U.S. agri-food industry. Our difference-in-differences analyses provide evidence that following a one standard deviation increase in merger activity there is a 48.1% decrease in pounds of food recalled and an 18.7% decrease in the total number of recalls. A significant implication of our analysis is that increased concentration increases product quality.

Using competition tools during the COVID-19 pandemic: are merger control and state support substitutes or complements?

Many firms are facing financial difficulty as a result of COVID-19. However, we have not (yet) seen the predicted increase in merger activity or bankruptcies in some of the sectors most affected by the pandemic, including aviation. This may be, in part, a result of the substantial state support that has been provided to a number of companies in the sector. This article considers whether it is preferable to provide state aid to companies in order to allow them to continue operating, or should these ‘failing’ or ‘flailing’ firms be allowed to be acquired by others. It further considers whether there could be more alignment between these tools.

COMPETITION AND MERGER ACTIVITY IN THE U.S. TELECOMMUNICATIONS INDUSTRY

AbstractIn this article we examine the U.S. telecommunications industry during a period of rapid deregulation to determine the effects of a deregulatory shock on industry competition and merger activity. We show that merger activity exhibits a clear wave‐like pattern, regardless of the listing status of the participants. Increased competition and IPO activity following deregulation increased cash‐flow volatility and probability of exit while the introduction of new technology increased dispersion of economic efficiency across the industry. These changes resulted in a significant increase in merger activity. Competition also played an important role in shaping “who buys whom?”

Merger Waves and the Austrian Business Cycle Theory

Following standard Austrian School theory, in this paper I identify merger waves as parts of Austrian type business cycles. As indicated by Mises, Rothbard and Hayek, when loan rates are reduced below their natural level through bank credit expansion this falsifies the monetary calculation of capitalist-entrepreneurs. As a result, new investments are initiated that calculation showed were not profitable before the interest rate reduction. On the other hand, the fall in interest rates falsifies households’ appraisals of their income and wealth, which turns them overly optimistic and causes them to over-consume, save less and go into debt. As a consequence of these developments the economy does not have enough resources for the completion of the new projects and businesses must increasingly withdraw the resources from other companies. I conclude that the increase in investment activity and the accompanying “resource crunch” cause a merger wave that helps prolong the boom phase of the cycle. The merger wave ends when the credit expansion is not sufficient to sustain the economic boom (which usually occurs when central banks finally let interest rates rise again and an overextended financial system tightens credit standards) and the bust phase begins. On the other hand, if the newly created fiduciary media does not enter the economy through the loan market to finance business investment, there should be no pronounced and sustained increase in merger activity followed by an economic bust.

EU Competition Law Developments in the Aviation Sector from 1 January 2012 to 26 July 2012

The first part of 2012 has been relatively quiet in terms of competition law activity in the aviation sector, although this period finally brings us the European Commission's (the 'Commission') published decision in the Olympic Air / Aegean merger prohibition, the Commission's published clearance decision in the IAG / BMI merger, and a Commission decision in the freight forwarding cartel investigation. There has been an increase in merger activity in the aviation sector over the past few months, although most of these are still awaiting a decision by the Commission. This article first summarizes any relevant judgments of the European Courts, and those judgments which are still pending, as well as any decisions and ongoing investigations by the Commission which occurred during the period under review. It then considers in further detail some of the more significant cases and important themes arising therefrom, and in particular the Commission decisions in the Olympic Air / Aegean merger and the IAG / BMI merger, in addition to the freight forwarding cartel decision.

Deregulation, Competition and Merger Activity in U.S. Telecommunications Industry

Using the 1996 Telecommunications Act as a natural experiment, I examine the role of competition in “how” economic shocks drive industry-level clustering of merger activity and “who buys whom?” In the telecom industry, deregulation opened both the local and long-distance markets to competition from new communication technologies, driving significant increases in IPO and merger activity. My findings support the view that the increase in merger activity following the 1996 deregulation was an efficiency-improving restructuring response to increased competition from deregulation and technological change, and not to increased misvaluation. The economic shocks from deregulation and technological change drive merger activity by increasing industry competition. I find no significant relationship between the level of merger activity and stock market misvaluation. I find evidence systematically relating telecom firms’ performance and merger characteristics; pre-1996 deregulation levels of efficiency and leverage show up as important determinants of an incumbents’ survival and/or merger fate; the more efficient and less leveraged incumbents are more likely to be the acquirers than the targets in mergers involving two incumbents.

A survey of academic departments of emergency medicine regarding operation and clinical practice

Study Objective: To survey academic departments of emergency medicine concerning their operation and clinical practice. Methods: A survey was mailed to the chairs of all 56 academic departments of emergency medicine in the United States requesting information concerning operations and clinical activity in budget year 1997-1998 compared with 1995-1996. These results were then compared with a similar survey conducted in the fall of 1996, examining the 1995-1996 academic year compared with the 1994-1995 academic year. Results: Forty-one (73%) academic departments of emergency medicine responded. For 1997-1998, compared with 1995-1996, 24 (59%) academic departments of emergency medicine reported an increase in emergency department patient volume; 10 (24%) reported a decrease. Twenty-four (51%) academic departments of emergency medicine reported an increase in ED patient severity, whereas 7 (15%) reported a decrease. Twenty-five (61%) academic departments of emergency medicine reported an increase in net clinical revenue for emergency medicine services, and 9 (22%) reported a decrease. Only 9 (22%) academic departments of emergency medicine reported other academic departments within their university/medical center aggressively directing patients away from the ED compared with 14 (30%) in the previous study. The percentage of academic departments of emergency medicine using midlevel providers remained essentially the same over time (68% versus 66%). In both studies, midlevel providers were used most commonly in a fast-track setting. Only 37% of academic departments of emergency medicine reported having an observation unit; staffing in all cases was by emergency physicians. Since the last survey, 38 (93%) academic departments of emergency medicine reported their medical center or hospital negotiating with managed care organizations to provide services. Unfortunately, only 41% of chairs were involved in these discussions. Between January 1, 1997, and the 1998 fall survey, 29% of academic departments of emergency medicine reported their university merging with another university system, and 19% reported such mergers being discussed. Similarly, between January 1, 1997, and fall 1998, 22% of academic departments of emergency medicine reported their institution merging with a private entity, whereas 16% reported ongoing discussions. Conclusion: Academic departments of emergency medicine have experienced some encouraging trends: an increase in ED patient volume, patient severity, and net clinical revenue during the study period. Midlevel providers continue to be used primarily in fast-track areas of EDs. An area of potential growth for academic departments of emergency medicine is observation medicine, because only one third of academic departments of emergency medicine have such a unit. Academic medical centers have experienced a significant increase in merger activity during the study period. [Counselman FL, Schafermeyer RW, Garcia R, Perina DG. A survey of academic departments of emergency medicine regarding operation and clinical practice. Ann Emerg Med. November 2000;36:446-450.]

Implicit Values of Multiple Car Grain Loading Facilities in Iowa and Nebraska

A mathematical programming model of grain transportation is structured such that alternative types of rail shippers and rail rates are represented within an individual region. Shadow prices of solutions are used to assess values of multi-car grain loading facilities in Iowa and Nebraska by intrastate region and by facility size. Results indicate that, given 1980 facility and transport rate conditions, Iowa was overbuilt in 25and 50-car loading facilities, and that there were large incentives for facility expansion in Nebraska. Unit-train grain shipments to export ports began in 1965 when Interstate Commerce Commission approved a rate proposal by Southern Railway System for trainload shipments of 44 cars from Louisville, Kentucky to Charleston, South Carolina [26, p. 134].' This unit-train export-grain rate set a precedent which was followed during late 1960s and 1970s by railroad companies operating throughout Midwest, causing multiple-car and unit-train shipments to become predominant means of transporting midwestern corn and soybeans by rail to export ports. Unittrain rates were not used extensively in Great Plains and western states until early 1980s when most west-bound carriers offered unit-train rates to West Coast. Multiple-car and unit-train rail shipments result in decreased terminal and switching costs as cars are handled in multiple units rather than single-car shipments. Additionally, more efficient usage of rail-car capacity is guaranteed to railroads through consecutive train-load requirements. The decreased labor and overhead expenses per equipment unit are partially passed on to grain shippers in form of reduced rates which are inversely related to shipment size. However, to take advantage of these rates, shipper must provide adequate rail siding, storage, other plant facilities, and grain to load multi-car units in required time period. In past decade, multi-car loading facilities of various sizes have been built throughout Midwest. Indeed, given recent increase in merger activity among grain cooperatives with multiple-car load-out facilities in Iowa [13, p. 15], it appears as if industry is now overbuilt in some areas. In contrast, multi-car shipping industry is relatively young in western states of Nebraska, Dakotas, Montana, Colorado, Kansas, Idaho, and Washington. There are two general objectives of this paper. The first objective is to show how multicar constraint equations can be used in linear programs to model more than one rate per transport mode per origin-destination pair; i.e., for a particular destination, there may be numerous rail rates available from a point or region because of different shipment size provisions. Past national models of crop sector have failed to constrain these various shipment size and rate opportunities for a single originating region within one linear programming model [2, 6, 9, 11, 16, 17, 19, 23, 24, 27, 29]. The second objective is to estimate implicit values of multiple-car shipping facilities in Iowa and Nebraska based on shadow prices of multi-car constraints. A national linear programming model is used to project transport flows and costs for grain originating from regions throughout U.S. [3, 14]; however, focus of this paper is on results of national model for only Nebraska and Iowa because these states are representative of mature and new multi-car grainshipping industries. Conclusions will be drawn concerning relative need for additional Authors are Assistant Professor of Agricultural Economics, University of Illinois; Assistant Professor of Agricultural Business and Economics, Southern Illinois University; and a Charles F. Curtiss Distinguished Professor in Agriculture and Professor of Economics, Iowa State University, respectively. Financial support for this research was provided by U.S. Department of Transportation under Contract DTRS-57-80-C--00133. The authors gratefully acknowledge helpful comments of three anonymous reviewers. 'The first unit-train tariff was published in 1963 by Soo Line Railroad. The tariff applied to wheat shipments from Twin Cities to Buffalo and, although it was not an export-grain tariff, it represented the first of its kind in American railway transportation of grain. [26, p. 131]. This content downloaded from 157.55.39.246 on Tue, 27 Sep 2016 05:55:45 UTC All use subject to http://about.jstor.org/terms MULTIPLE CAR GRAIN LOADING FACILITIES, Hauser, Beaulieu, and Baumel 81 multi-car facilities by intrastate region. Although model was developed to answer allocational questions, shadow prices have locational implications. (Some good reviews of different types of locational models can be found elsewhere [8, 12, 22, 25]). Other analyses have examined locational and efficiency aspects of grain handling and transportation systems given costs and benefits realized on a state or sub-state basis; e.g. [1, 5, 15, 18, 20, 21, 34]. This analysis offers facility evaluations in context of total U.S. transportation costs.

A Note on Union Merger Trends, 1900 – 1978

This paper examines 143 union mergers that have occurred since the turn of the century, identifying the frequency and forms of mergers (106 absorptions and 37 amalgamations) and the affiliations of merger partners. The data for three broad time periods and for five-year intervals indicate, among other trends, a long-term decline in the proportion of amalgamations and an increase in merger activity since the formation of the AFL-CIO in 1955. The author also discusses the frequency and forms of mergers between affiliates of the AFL, CIO, AFL-CIO, and unaffiliated unions.

The Race to Oligopoly

The recent significant increase in merger activity among the nation's large industrial corporations has become the subject of considerable concern. This article examines current developments in the merger area and appraises their effect upon the continuance of the competitive system. The authors view the implications of this merger trend against the backdrop of existing legislative controls, and posit guidelines for additional antitrust legislation to halt the race to oligopoly.