Assessing the Consequences for Competition
6.0 INTRODUCTION This chapter uses the simulation methodology to assess the eﬃcacy of remedies for two of the mergers in the paper sector (see Table 5.2): KimberlyClark/Scott (KC/S) in tissues, and SCA/Metsa (S/M) in corrugated packaging. These were chosen as examples, respectively, of diﬀerentiated and homogeneous products. Unfortunately, the DG Competition questionnaire/interview survey (2005) which was being conducted simultaneously with our project included only one of these mergers, KC/S, and so a full ex post assessment of S/M is not possible. The chapter is in two main sections, one for each merger. The two sections follow the same structure, starting with ﬁlling in the checklist from Chapter 4, supplemented by some ancillary analysis to derive estimates of demand elasticities. The simulation proper starts with some introductory remarks on how we intend to characterize the merger and remedy, and what this will entail for ex ante and ex post assessment. We then set out what we believe to be the appropriate oligopoly model. The merger and remedies are then simulated ex ante, with sensitivity analysis on the assumptions about nesting, capacity and eﬃciency savings. This generates our main predictions and simulation results. We close the ex ante simulations with a discussion of alternative remedies that might have been used. Finally, we turn to ex post developments in the market, including, in the KC/S case, information from the DG Competition survey. 6.1 6.1.1 KIMBERLY-CLARK/SCOTT PAPER (1996) – M623 Applying the Checklist The ﬁrst task is to summarize the key features...
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