Professor Farasat Bokhari<\/a> said: \u201cWhen companies want to merge, they can argue that combining their operations will create \u2018efficiencies\u2019.<\/p>\n\u201cIn simple terms, a bigger combined company might be able to manufacture, distribute or sell its products more cheaply.<\/p>\n
\u201cThe argument is that these savings can compensate for the loss of competition caused by turning two competing businesses into one.<\/p>\n
\u201cBut our new research suggests the reality can be more complicated.\u201d<\/p>\n
The researchers studied the prices of over-the-counter cough and cold medicines in the Philippines before and after GSK and Pfizer combined their consumer healthcare businesses in 2019.<\/p>\n
The companies had predicted the deal would eventually save around \u00a3500 million a year.<\/p>\n
The study found evidence that some efficiencies were real: the estimated cost of supplying Pfizer products fell by 9.43%, while their prices dropped by 6.57%.<\/p>\n
However, consumers did not see lower prices across the market. GSK’s prices increased by an estimated 3.25%, while Sanofi, a major international competitor, raised its prices by 8.55%.<\/p>\n
Prices from cheaper local manufacturer Unilab remained broadly unchanged.<\/p>\n
The researchers found evidence consistent with greater coordination between GSK\/Pfizer and Sanofi after the merger.<\/p>\n
\u201cThis does not mean the companies explicitly agreed on prices,\u201d said Prof Bokhari.<\/p>\n
\u201cInstead, having fewer independent competitors makes it easier for companies to coordinate on prices without explicitly agreeing to do so, which in turn means that prices are higher than what we would expect under competition.\u201d<\/p>\n
The findings suggest that mergers can create genuine savings without necessarily benefiting consumers.<\/p>\n
The researchers argue that competition authorities should therefore consider not only whether a merger makes companies more efficient but also whether the merger makes coordination more likely and hence does not result in lower prices for the consumers.<\/p>\n
ENDS<\/p>\n","protected":false},"excerpt":{"rendered":"Merging companies might become cheaper and more efficient to run, but savings are not necessarily passed onto shoppers…\n","protected":false},"author":2,"featured_media":107470,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[20784],"tags":[20785],"class_list":["post-107469","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gsk","tag-gsk"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/117128001364054451","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/107469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=107469"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/107469\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/107470"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=107469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=107469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=107469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}