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Merger screen and the use of price pressure test

Mergers between competitors might generate relevant anti-competitive effects. Therefore, competition authorities need effective tests to make a preliminary assessment of the likelihood of unilateral effects of horizontal mergers. These tests are usually based on market shares and rely on the definition of the relevant market. However, in some market settings, this approach might fail to screen mergers adequately. To overcome the limitation of traditional tools some alternative tests have been proposed. This note reviews the Upward Pricing Pressure (UPP), the Gross Upward Pricing Pressure Index (GUPPI) and the Illustrative Price Rise (IPR) and presents a graphical comparison of their implications.


Date: February 2013
Author(s): Lear
Tag(s): Lear Competition Notes , Competition Economics, Mergers