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The aim of this paper is to theoretically establish the application of Cournot’s model of competition as the reduced form of two-stage competition in oligopoly markets, in the circumstances with limited capacities. In this manner, a valuable tool is provided to the competition protection authority for analysing the unilateral effects of the horizontal mergers. The outcome of the two-stage competition, where firms chose to have a certain level of capacity, before the price competition, coincides with the outcome of the Cournot quantity competition model. Moreover, it turns out that this result is valid both for the homogeneous products markets and for the markets with differentiated products. This contradicts a standard attitude that quantity is a strategic variable exclusively within the homogeneous product markets. While controlling horizontal mergers, the competition authority often relies on traditional analysis elements, which start with the definition of the relevant market and market shares, and the concentration measures based on that definition. Analyses of this kind are carried out almost in a standard manner, for both markets with homogeneous and differentiated products. It is easy to verify that every analysis of this type encompasses the mentioned model of quantity competition in its foundation. Therefore, the discussion that is presented attempts to eliminate doubts related to the role of the Cournot model in merger control policy.

In this paper we present the difference-in-differences methodology implemented by the Romanian Competition Council in the second half of 2013. The analysis was conducted to evaluate the ex-post impact of a merger in the Romanian retail market, authorised by the competition authority in November 2010. In the merger review process, we identified five potentially problematic locations (the treatment group), and selected accordingly representative time intervals and product categories (11). We also defined a suitable group of other stores (the control group) to be used as a benchmark in our analysis. The implementation of the difference-in-differences technique through regression analysis rendered 55 case estimates, of which 49 match the departing hypotheses and are thus considered reliable. In each of these cases we estimated the percentage change in the price of a product category in a given store, due to merger clearance. Our results indicate that the approved merger has not led to general price increases: in 36 of 49 cases the merger impact on prices is not statistically significantly different from zero and only three of the 49 cases show price increases. Moreover, there are significantly more situations where the prices for certain product category-store combinations decreased following the merger (ten such cases). Consequently, it appears that the Romanian Competition Council’s decision to clear the merger in November 2010 was the right approach.