Simulation algorithm for mergers and acquisitions

Consumer and Market Authority

Mergers and acquisitions are situations where companies move forward together (merger) or where one company buys another (acquisition). This can affect businesses and consumers. The ACM therefore checks whether such cooperation is fair and does not give too much power to one company. In this way, the ACM ensures that the market continues to work well for everyone.

Last change on 9th of July 2025, at 12:20 (CET) | Publication Standard 1.0

• Publication category: Other algorithms
• Impact assessment: Field not filled in.
• Status: In use

General information

Theme

Economy

Begin date

2020-01

Contact information

[e-mail]

Link to publication website

Bevoegdheden | ACM

Responsible use

Goal and impact

The ACM regularly conducts research to estimate the potential impact of a merger or acquisition. This involves using a demand or supply model, for example, to predict what the price might be after the merger. The researcher decides which models are used and what the relationships between the data look like; the algorithm does not do this automatically. The results of such a simulation are important for how the research proceeds and have a high impact on the takeover or merger assessment. The choices made are recorded and substantiated within the case file and parties can review them.

Considerations

The trade-offs are different for each case, but in the case of a merger or acquisition, the ACM wants to know what might happen to prices, for example, if an acquisition or merger takes place. Because that is quite complicated to calculate, an algorithm helps with that. Merger simulations are smart calculation tools that can predict what might change. This helps the ACM better understand whether the merger is fair for consumers and other businesses.

Human intervention

In these calculations, the researcher himself plays the most important role. For example, he or she chooses which data (variables) are important and which model to use.

Risk management

Other researchers check the simulation to avoid errors. They also test whether the results remain the same if certain choices or assumptions change. How the ACM deals with risk depends on the situation in the case itself.

Legal basis

Competition law

Operations

Data

Data collection takes place within the case, often involving price, supply and demand, among other things.

Technical design

The technical operation depends on the specific application. In all cases, a demand model modelling the behaviour of customers and a supply model modelling the behaviour of suppliers are used. The balance of the model must satisfy a set of equations and conditions. These equations change with the merger and are used to find the new equilibrium.