Assessing the efficacy of structural merger remedies:choosing between theories of harm?

Previous empirical assessments of the effectiveness of structural merger remedies have focused mainly on the subsequent viability of the divested assets. Here, we take a different approach by examining how competitive are the market structures which result from the divestments. We employ a tightly specified sample of markets in which the European Commission (EC) has imposed structural merger remedies. It has two key features: (i) it includes all mergers in which the EC appears to have seriously considered, simultaneously, the possibility of collective dominance, as well as single dominance; (ii) in a previous paper, for the same sample, we estimated a model which proved very successful in predicting the Commission’s merger decisions, in terms of the market shares of the leading firms. The former allows us to explore the choices between alternative theories of harm, and the latter provides a yardstick for evaluating whether markets are competitive or not – at least in the eyes of the Commission. Running the hypothetical post-remedy market shares through the model, we can predict whether the EC would have judged the markets concerned to be competitive, had they been the result of a merger rather than a remedy. We find that a significant proportion were not competitive in this sense. One explanation is that the EC has simply been inconsistent – using different criteria for assessing remedies from those for assessing the mergers in the first place. However, a more sympathetic – and in our opinion, more likely – explanation is that the Commission is severely constrained by the pre-merger market structures in many markets. We show that, typically, divestment remedies return the market to the same structure as existed before the proposed merger. Indeed, one can argue that any competition authority should never do more than this. Crucially, however, we find that this pre-merger structure is often itself not competitive. We also observe an analogous picture in a number of markets where the Commission chose not to intervene: while the post-merger structure was not competitive, nor was the pre-merger structure. In those cases, however, the Commission preferred the former to the latter. In effect, in both scenarios, the EC was faced with a no-win decision. This immediately raises a follow-up question: why did the EC intervene for some, but not for others – given that in all these cases, some sort of anticompetitive structure would prevail? We show that, in this sample at least, the answer is often tied to the prospective rank of the merged firm post-merger. In particular, in those markets where the merged firm would not be the largest post-merger, we find a reluctance to intervene even where the resulting market structure is likely to be conducive to collective dominance. We explain this by a willingness to tolerate an outcome which may be conducive to tacit collusion if the alternative is the possibility of an enhanced position of single dominance by the market leader. Finally, because the sample is confined to cases brought under the ‘old’ EC Merger Regulation, we go on to consider how, if at all, these conclusions require qualification following the 2004 revisions, which, amongst other things, made interventions for non-coordinated behaviour possible without requiring that the merged firm be a dominant market leader. Our main conclusions here are that the Commission appears to have been less inclined to intervene in general, but particularly for Collective Dominance (or ‘coordinated effects’ as it is now known in Europe as well as the US.) Moreover, perhaps contrary to expectation, where the merged firm is #2, the Commission has to date rarely made a unilateral effects decision and never made a coordinated effects decision.

Unilateral versus coordinated effects:comparing the impact on consumer welfare of alternative merger outcomes

The nature of tacitly collusive behaviour often makes coordination unstable, and this may result in periods of breakdown, during which consumers benefit from reduced prices. This is allowed for by adding demand uncertainty to the Compte et al. (2002) model of tacit collusion amongst asymmetric firms. Breakdowns occur when a firm cannot exclude the possibility of a deviation by a rival. It is then possible that an outcome with collusive behaviour, subject to long/frequent break downs, can improve consumer welfare compared to an alternative with sustained unilateral conduct. This is illustrated by re-examining the Nestle/Perrier merger analyzed by Compte et al., but now also taking into account the potential for welfare losses arising from unilateral behaviour.

Case based design of knitwear

In the developed world we are surrounded by man-made objects, but most people give little thought to the complex processes needed for their design. The design of hand knitting is complex because much of the domain knowledge is tacit. The objective of this thesis is to devise a methodology to help designers to work within design constraints, whilst facilitating creativity. A hybrid solution including computer aided design (CAD) and case based reasoning (CBR) is proposed. The CAD system creates designs using domain-specific rules and these designs are employed for initial seeding of the case base and the management of constraints. CBR reuses the designer's previous experience. The key aspects in the CBR system are measuring the similarity of cases and adapting past solutions to the current problem. Similarity is measured by asking the user to rank the importance of features; the ranks are then used to calculate weights for an algorithm which compares the specifications of designs. A novel adaptation operator called rule difference replay (RDR) is created. When the specifications to a new design is presented, the CAD program uses it to construct a design constituting an approximate solution. The most similar design from the case-base is then retrieved and RDR replays the changes previously made to the retrieved design on the new solution. A measure of solution similarity that can validate subjective success scores is created. Specification similarity can be used as a guide whether to invoke CBR, in a hybrid CAD-CBR system. If the newly resulted design is suffciently similar to a previous design, then CBR is invoked; otherwise CAD is used. The application of RDR to knitwear design has demonstrated the flexibility to overcome deficiencies in rules that try to automate creativity, and has the potential to be applied to other domains such as interior design.

Controlling system uncertainty in sport and work

An applied psychological framework for coping with performance uncertainty in sport and work systems is presented. The theme of personal control serves to integrate ideas prevalent in industrial and organisational psychology, the stress literature and labour process theory. These commonly focus on the promotion of tacit knowledge and learned resourcefulness in individual performers. Finally, data from an empirical evaluation of a development training programme to facilitate self-regulation skills in professional athletes are briefly highlighted.

Fuel supplier selection for large scale UK bioenergy schemes

This article presents a potential method to assist developers of future bioenergy schemes when selecting from available suppliers of biomass materials. The method aims to allow tacit requirements made on biomass suppliers to be considered at the design stage of new developments. The method used is a combination of the Analytical Hierarchy Process and the Quality Function Deployment methods (AHP-QFD). The output of the method is a ranking and relative weighting of the available suppliers which could be used to improve optimization algorithms such as linear and goal programming. The paper is at a conceptual stage and no results have been obtained. The aim is to use the AHP-QFD method to bridge the gap between treatment of explicit and tacit requirements of bioenergy schemes; allowing decision makers to identify the most successful supply strategy available.

Competence requirements for managing supply in interorganizational networks

The authors address the growing call for research into the management of supply networks serving the public sector. Building on prior action research, this empirical paper focuses on the management of supply in interorganizational, health sector networks identifying the competence requirements (skills, knowledge, traits, and behavioural indicators) associated with effective team performance. Drawing on empirical data, the authors present a competence framework that aims to capture a team’s tacit understanding of strategic supply management. Competence indicators are organized into six themes: network understanding; developing network position; relationship management; learning, knowledge and knowledge management; strategy formulation; strategy implementation. Finally, the relevance of the framework to boundary spanning personnel outside the purchasing function and to other organizations is considered.

Conversational interaction in the scanner:mentalizing during language processing as revealed by MEG

Humans are especially good at taking another's perspective-representing what others might be thinking or experiencing. This "mentalizing" capacity is apparent in everyday human interactions and conversations. We investigated its neural basis using magnetoencephalography. We focused on whether mentalizing was engaged spontaneously and routinely to understand an utterance's meaning or largely on-demand, to restore "common ground" when expectations were violated. Participants conversed with 1 of 2 confederate speakers and established tacit agreements about objects' names. In a subsequent "test" phase, some of these agreements were violated by either the same or a different speaker. Our analysis of the neural processing of test phase utterances revealed recruitment of neural circuits associated with language (temporal cortex), episodic memory (e.g., medial temporal lobe), and mentalizing (temporo-parietal junction and ventromedial prefrontal cortex). Theta oscillations (3-7 Hz) were modulated most prominently, and we observed phase coupling between functionally distinct neural circuits. The episodic memory and language circuits were recruited in anticipation of upcoming referring expressions, suggesting that context-sensitive predictions were spontaneously generated. In contrast, the mentalizing areas were recruited on-demand, as a means for detecting and resolving perceived pragmatic anomalies, with little evidence they were activated to make partner-specific predictions about upcoming linguistic utterances.

Advanced predictive-analysis-based decision support for collaborative logistics networks

Purpose – The purpose of this paper is to examine challenges and potential of big data in heterogeneous business networks and relate these to an implemented logistics solution. Design/methodology/approach – The paper establishes an overview of challenges and opportunities of current significance in the area of big data, specifically in the context of transparency and processes in heterogeneous enterprise networks. Within this context, the paper presents how existing components and purpose-driven research were combined for a solution implemented in a nationwide network for less-than-truckload consignments. Findings – Aside from providing an extended overview of today’s big data situation, the findings have shown that technical means and methods available today can comprise a feasible process transparency solution in a large heterogeneous network where legacy practices, reporting lags and incomplete data exist, yet processes are sensitive to inadequate policy changes. Practical implications – The means introduced in the paper were found to be of utility value in improving process efficiency, transparency and planning in logistics networks. The particular system design choices in the presented solution allow an incremental introduction or evolution of resource handling practices, incorporating existing fragmentary, unstructured or tacit knowledge of experienced personnel into the theoretically founded overall concept. Originality/value – The paper extends previous high-level view on the potential of big data, and presents new applied research and development results in a logistics application.