Between Ordoliberalism, Company Mergers and Acquisitions

A highlight of the first conference day was the Heike Schweitzer keynote lecture, delivered by Pablo Ibáñez Colomo (London School of Economics, LSE) in memory of the former MaCCI Board and MaCCI Advisory Board member. Professor Ibáñez Colomo explored the question whether the ordoliberal compact has reached its end.

In his view, public institutions are a central consideration in ordoliberal thinking. He emphasised the importance of ensuring that those who exercise state power safeguard free market participation and prevent private-interest-driven actors from attaining positions of governmental authority.

Professor Colomo stressed that, in the ordoliberal tradition, public authorities must act independently and on the basis of rules, and that their decisions should be grounded in thorough legal reasoning. According to Colomo, public authorities that adhere to ordoliberal principles can achieve their objectives effectively if they credibly adhere to the rules. In doing so, they create a stable business and regulatory environment for all market participants.

The keynote speaker on the second day was Nancy Rose of the Massachusetts Institute of Technology (MIT). Drawing on her research into the effects of mergers and acquisitions (M&A) on consumer welfare, she examined how synergies and coordination among parties in M&A transactions impact consumer prices.

Professor Rose argued that consumer prices are the key criterion for assessing the welfare impact of M&A transactions. Reviewing a range of empirical studies on the price effects of mergers and acquisitions, she showed that the outcome depends on the specific circumstances of each case – i.e. on whether the price-increasing or price-decreasing effect dominates. Her conclusion was that mergers relevant to competition authorities tend to result in price increases for consumers, as the effects of price coordination usually outweigh the benefits of synergies.

Professor Rose stressed the need to determine the causal impact of such mergers on consumer prices more precisely in order to enable reliable insights into the welfare implications of M&A transactions – especially for use by competition authorities. This required defining a clear counterfactual scenario and applying methods of causal inference to identify dependable causal relationships.