The impact of European Commission merger regulation on US domestic M&As

We study the wealth effects of the European Commission's (EC) merger regulation on the shareholders of the acquiring and target firms in US domestic mergers, as well as their international rivals. We find that regulatory investigation and oversight by the EC in purely domestic US mergers engendered a significant financial cost to the merger deals. Over the 1990-2010 sample period, the combined firms (acquirer and target) in the average deal in our sample lost about $8 billion in shareholder value. Rival firms in the US, EU countries, and other international markets were also financially penalized by EC intervention. Our results provide evidence of the negative impact of extraterritorial regulatory intervention (“economic nationalism”) in the mergers and acquisitions market.