OPTIMAL PRE-MERGER NOTIFICATION THRESHOLDS: A CONTRIBUTION TO THE ITALIAN DEBATE

This paper outlines a theoretical framework to define the optimal notification thresholds so as to minimize the sum of Type I and Type II error costs. Results suggest that, when the notification rule takes into account in a cumulative way both the aggregate turnover of the merging parties and their individual turnover, the optimal values of these turnovers are interdependent. The model is then applied to the Italian case. The value of the threshold for the aggregate turnover has been obtained by benchmarking the rules set in the EU Member States through a simple econometric exercise. The value of the threshold for the individual turnover is then calculated applying the theoretical framework and the estimated costs of Type I and Type II errors.