Effects of non-compliance with structural remedies of competition authority (on the example of remedies in Rosneft - TNK-BP merger)

Abstract

An impact and effectiveness of antitrust remedies (both structural and behavioral) issued by antitrust authorities as a condition for merger clearance are still poorly studied especially in Russian practices. The question raised in this article is quite unconventional. Does the form of remedies really matter to prevent consumer harm due to increased market power after merger? Is exact remedies fulfillment necessary for price increases preventing?To reach the answer on these questions there have been investigated Rosneft’s acquisition of TNK-BP, which both are large oil companies operating on Russian market. Antitrust remedies issued by FAS of Russia regarding to this merger included gas station selling in regions where market share of united company after the deal exceeded 50%. In fact, this condition was fulfilled in small part that cannot be considered as complete fulfillment. Analysis of prices using difference-in-difference approach demonstrated the absence of retail price increase after the merger. This result implies that information about FAS’s supervision over markets affected by the deal on its own may prevent price increase and negative impact on consumer welfare.