Merger Efficiency and Coordinated Effects: Nothing to Sneeze at? Evidence From Cough and Cold Medicines in the Philippines

ABSTRACT We investigate the competitive effects of a merger in the cough and cold medicines segment between GlaxoSmithKline (GSK) and Pfizer. The parties offered efficiency gains, and authorities concluded the merger would not lessen competition. Using product‐level data from the Philippines, we estimate a structural demand model to assess efficiency and coordination. We find that prices and marginal costs decline for Pfizer, but not for GSK. Further, the price of a close competitor, Sanofi, also increased substantially. The increase in Sanofi prices is likely due to increased coordination, and efficiency gains do not necessarily lead to lower prices.