The paper studies how the 2004 merger policy reform affected the probability of a merger being challenged by the European Commission. I use a probit model to assess how economic factors drive decisions and to isolate differences between policies before and after the reform. The net sample consists of 341 horizontal mergers from 1990 to 2012. Overall, I find robust evidence of policy shifts due to the reform. By some measures, the policy appears to have slightly softened. There is also an indication that mergers reviewed under the unilateral-effects theory are more likely to be challenged than are those reviewed under the coordinated-effects theory. Market shares and entry barriers are found to influence decisions before and after the reform. However, market shares appear to play a somewhat smaller role after the reform.

The European Union (EU) formally changed its merger policy in 2004, moving from a dominance standard to one based on a significant impediment of effective competition, which appears more closely aligned with the U.S. substantial lessening of competition standard. We use data from both before and after this reform to explore whether EU policy has converged toward the U.S. standard. We start by identifying changes in the EU regime and detect a softer EU policy for unilateral effects. We model the outcomes of EU and U.S. investigations with logit models and use their predictions in decompositions and other exercises to show policy convergence for unilateral effects cases.