Structural remedies as a signaling device

•We analyze the effects of remedies on merger activity.•Merger efficiencies are unobservable ex ante.•We investigate in how far remedies can be used as signaling devices.•An efficient merger type is doomed to over-fix with its divestiture proposal.•This holds in a pooling and possibly also in a separating equilibrium.

We analyze the effects of structural remedies on merger activity when the Antitrust Agency (AA) cannot observe a proposed merger's efficiency type. Provided the AA follows a consumer surplus standard, an efficient merger type is doomed to over-fix with its divestiture proposal in a pooling equilibrium, which is also possible under separation.