COPEC-CGL Merger: An Ex-Post Empirical Assessment of the FNE’s Decision

2.10.2024

CeCo Chile

Daniel Redel Ingeniero Comercial y Magister en Economía Aplicada, Pontificia Universidad Católica de Chile. Magister en Econometria y Economia Matematica en la Universidad de Tilburg. Diplomado en Libre Competencia, Universidad Adolfo Ibáñez.

Abstract: This article studies the acquisition of an independent service station (CGL) by COPEC to assess its impact on prices in the local gasoline retail market. I adopt a differences-in differences strategy that compares the relevant geographic market affected by the increased market concentration due to the acquisition with geographic markets not affected by the merger within the region. I found evidence of a modest but statistically significant price increase in the stations affected by the acquisition, with average increases of approximately 0.7% for both gasoline 93 and 97. These findings are broadly consistent with the GUPPI calculations performed by the Chilean Competition Agency (FNE), although diesel price effects are slightly lower than the FNE’s predictions. Overall, since both the FNE’s GUPPI calculations and the empirical results indicate price increases below the 5% threshold—implying limited competitive concerns—the FNE’s decision to approve the merger is justified based on this analysis.

«The empirical analysis revealed that the merger led to statistically significant yet modest price increases: approximately 0.7 % for Gasoline 93 and 97, and around 0.5 % for Diesel. These results are consistent with the FNE’s GUPPI calculations, which predicted upward price pressures of 0.6 % for Gasoline 93 and 0.9 % for Gasoline 97 and Diesel».

El código Python y análisis realizado en este estudio puede ser consultado en el siguiente enlace: https://dannyredel.github.io/posts/gasoline_merger_did/merger-report.html