E.CA Compact

Vertical effects when assessing passive minority shareholdings

While the discussion among economists on passive minority shareholdings focusses on horizontal unilateral as well as coordinated effects of such acquisitions, in some cases the main concerns of market participants are of a vertical nature. When analysing such vertical effects one needs to account for the fact that the acquirer does not gain control over the strategic decisions of the target precluding certain foreclosure strategies. This allows a more focussed review of competitive effects.

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Keywords: minority shareholdings, vertical effects