Unformatted text preview: ue-to-weight 10% (plastic bottles) - 20% (glass bottles) for every 300 km
10% Little trade between EC countries (exception: imports
into Belgium are high)
Entry in French market is difficult as mature market,
established brand names, lot of advertising would be
HOWEVER: little trade is no good indication; right
question is whether imports would occur after price
54 Single Firm dominance Nestlé owns Vittel and Hépar
Perrier owns Perrier, Contrex, Volvic, St. Yorre, Thonon,
and Vichy, as well as several local spring water brands
BSN (competitor) owns Evian and Badoit
Three firms hold 82.3% of market in terms of value and
76% in volume.
Estimates at firm level: BSN 25%, Nestlé 20-25%, Volvic
7% and other Perrier brands 20-25%
Merger would result in single firm holding 45-55%,
largest rival 25%.
largest That would be enough to start analysis of single firm dominance IF merged firm would sell Volvic to competitor, BSN
would have 30% of market.
Volvic also had largest capacities in the industry single firm dominance argument much weaker: Nestlé/Perrier
could not behave independently from BSN.
55 Single Firm dominance Would merger be likely to raise prices? Market
3 is highly concentrated producers have more than 80% of market. Neven
Neven et al. (1993) estimate the lower bound
of HHI after merger at 2660, and change in
HHI of 1000.
Compare to US merger guidelines: very high values!!!
56 Single Firm dominance Supply No substitution or potential entry? important or actual competitors Is it true today still? Coca Cola‘s Dasani? local
local producers fragmented; none of these has
financial power to start large advertising campaign
Note: Even if market size increases, one should expect
persistence of high concentration due to high sunk cost.
persistence Entry barriers large due to regulation It
It was assumed that entry with purified tap water can never
57 Single Fi...
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- Spring '13