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Modelling af fusioner i detailsektoren

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Modelling the e¤ects of mergers in the retail sector.According to the Danish Competition Act, a merger that impedes ef-fective competition signi cantly, in particular by creating or strengtheninga dominant postition, shall be prohibited. To decide whether this is thecase the authorities need a quanti able model of the relationship betweenthe variables that are directly a¤ected by the merger and some measureof competition.In this paper we set up and calibrate a simple model of the inter-action of the retail and the wholesale markets based on a concrete case(the acquisition and merger of 250 shops previously organized in a vol-untary chain of shops comprising roughly half of the market for high-endcosmetics in Denmark).The model predicts that an unconditioned merger was likely to have asigni cant impact on retail prices, in particular through possible abuse ofbuyer-power, and that the authorities had good reasons for conditioningits approval on the removal of a number of contract-based barriers toentry.Analytically, the main results are the following: (1) In a linear modelcharacterized by heterogenous products and constant marginal costs theoptimal wholesale prices are una¤ected by the structure in the retail sec-tor. (2) The e¤ect on of buyer-power induced quantity discounts dependscrucially on the speci c design of the rebate scheme: A relative discounton the list price the independent shops are charged increases the averageretail price; A xed reduction relative to the pre-merger price reduces theaverage retail price). (3) Buyer-power induced retail price maintenance(RPM) increases the average retail price. RPM increases the competitive-ness and pro ts of the merged shops if producers keep wholesale pricesunchanged. If, however, the producers adjust their wholesale prices, thenRMP hurts merged and independent shops alike and bene ts only theproducers.

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Niels Blomgren-Hansen

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