Edited by Patrizio Bianchi and Sandrine Labory
Chapter 8: Mergers and Concentration Policy
Hans Schenk 1 Introduction Over the last one hundred years, we have seen ﬁve merger waves, three of which occurred after World War II. The ﬁfth wave, which had its rising tide from 1995 to 2000, required worldwide investments of no less than about US$12 000 billion. With about US$9000 billion, American and West European ﬁrms took the lion’s share (for more details, see Schenk 2002a, 2005). At the time, by way of comparison, acquisition expenditures by American and European ﬁrms were about seven times larger than Britain’s annual gross domestic product and more than 20 times Dutch GDP. On average, they amounted annually to about one-ﬁfth of US GDP. Put diﬀerently, American and West European investments in mergers and acquisitions were approximately equal to 60 per cent of their gross investments in machinery and equipment (gross ﬁxed capital formation) and they easily outpaced those in research and development (R&D). Business enterprise investments in acquisitions were no less than about eight times higher than business enterprise expenditures on R&D (which amounted to approximately US$1237 billion over the same period). The sheer size of the phenomenon makes it clear that the fate of mergers and acquisitions periodically, that is, during and after a wave, must have a crucial eﬀect on the fate of the economies in which they occur. If they improve the way in which society generates wealth, economies will noticeably beneﬁt, leaving aside the question to which parties the bene...
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