Conformity with International Recommendations on Merger Reviews: An Economic Perspective on "Soft Law."

During the current phase of international market integration one important form of corporate restructuring is through cross-border merger or acquisition. Even though such restructuring typically affects the markets of more than one economy, almost all reviews of mergers and acquisitions consider only intra-jurisdictional effects. A prominent international initiative, that has the support of many of the world's competition authorities, seeks to foster both convergence in national merger review regimes and the voluntary adoption of international best practices. Using publicly-available survey data on these regimes, we estimate the relative importance of numerous potential legal, institutional, economic, and political-economy determinants of the degree of national conformity with four merger-related Recommended Practices of the International Competition Network (ICN). We find that the determinants of such conformity differ markedly between the founding members of the ICN and other members. Moreover, certain economic and political-economy factors appear to play a more important role in determining the degree of conformity than legal and institutional factors; a finding that has implications for both the speed and the ultimate extent of convergence in national merger regimes that can be expected from this nonbinding or soft law initiative.