Vertical Mergers: comparison of competition laws of Europe and the USA Case study: Merger of CVS-Aetna

Details

Supervisors

Lambrecht, Philippe ; Su, Nanxu ; Irlenbusch, Bernd

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

The following research studies the reasons behind the acceptance or not of a vertical merger in the U.S.A. and in Europe. The central question of this thesis is why a vertical merger would be blocked under one jurisdiction and not another. A comparison of European and American antitrust laws of vertical mergers is performed and applied to the case study of the merger of Aetna and CVS Health. These two companies are active in the healthcare industry in the U.S.A., but on different levels of the supply chain. The main goal of this analysis is to attempt to predict the outcome of the American investigation of the merger and to imagine the outcome of such a merger in Europe. To do so, an extensive literature review is conducted on the rationales, the pros and cons of vertical integration, the European laws regarding mergers and the American antitrust laws. The result of this study is that the merger should be blocked by the Department of Justice in the U.S.A. because of the horizontal effects of this merger, as well as substantial increases to the market’s entry barriers following the deal. However, if this merger was attempted in Europe, it would probably be accepted by the European Commission mainly because of differences between the European and American healthcare markets’ structures.