Divestiture as an Antitrust Remedy in Bank Mergers

摘要

This study describes the evolution of the divestiture remedy, and provides someevidence regarding the efficacy of divestitures as a remedy for otherwise anticompetitive mergers. The findings are based upon an examination of the post-divestiture survival and market shares of entities (banks or offices as the case may be) divested because of competitive concerns. A statistical analysis is conducted to determine whether there is a relationship between market share performance and the size of buyers, the size of sellers, and whether the divested offices were owned by the acquiring or the acquired firm. Some evidence on the effectiveness of divestitures accepted by the Department of Justice vis a vis those accepted by the Federal Reserve is also presented. The sample includes most of the mergers that were approved between 1985 and 1992 with the condition that certain divestitures be completed.