Research Insights: How Do Changes in Brand Ownership Affect Competition and Consumer Welfare?

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Peer Reviewed icon Peer Reviewed
Date issued
Aug 2023
Subject
Procurement;
Competitiveness;
Saving;
Industry;
Regulation;
Small Business;
Branding;
Firms Dynamics
JEL code
F12 - Models of Trade with Imperfect Competition and Scale Economies • Fragmentation;
F23 - Multinational Firms • International Business;
F61 - Microeconomic Impacts;
K21 - Antitrust Law;
L13 - Oligopoly and Other Imperfect Markets
Country
United States
Category
Catalogs and Brochures
Changes in brand ownership resulting from cross-border mergers and acquisitions impact competition and consumer welfare. Foreign acquisitions of local brands often lead to an increase in cost or a decline in appeal for the acquired brand, with limited gains in efficiencies. However, the accompanying rise in market power has translated into higher profits for the majority of brand-acquiring firms. Pro-competitive policies in the United States and European Union that required divestitures in the beer industry as a condition for merger approval led to significant consumer savings. Similar policies in South America would have reduced consumer prices by 18%.