South African Journal of Economic and Management Sciences, Vol 13, No 1 (2010)

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On merger simulation and its potential role in south african merger control

Liberty Mncube, Hardin Ratshisusu, Bheki Dlamini

Abstract


This paper simulates the price effects of the proposed Ferro Industrial Products (Ferro) and Powder-Lak merger in order to suggest the role that merger simulation models should play in South African merger control. Merger simulation can provide support to the Commission’s analysis by; focusing parties’ attentions on verifiable economic arguments; making transparent the values of the key parameters and assumptions in the Commission’s analysis; producing quantitative estimates of the results of a given transaction; and indicating the amount of resources to allocate to proposed merger cases. However, it offers only one piece of evidence in a case and its results must be interpreted with an understanding of the potential limitations.

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EISSN 2222-3436 (Online)