Merger Control in the Banking Sector

Abstract

This Commentary discusses the implications of merger control policy on merger activity in the banking sector, drawing on an analysis of the European banking sector during a period in which stricter merger policies were being introduced. It identifies several changes to the bank mergers taking place after the introduction of the stricter policies that are consistent with higher expected returns for shareholders and more procompetitive transactions. The evidence suggests that the new merger policy was successful in preventing mergers that are excessively anticompetitive, while it also led to banks’ finding mergers that are expected to deliver greater efficiency.