The Success of Divestitures in Merger Enforcement:  Evidence from the J&J-Pfizer Transaction

Despite being a widely used tool in merger enforcement, there have been few studies of whether antitrust divestitures are successful.  We help fill this void by conducting a study of the divestitures relating to Johnson & Johnson’s $16.6 billion acquisition of Pfizer’s consumer health division in 2006.  Six brands were divested in this matter to alleviate antitrust concern.  For three of the brands, their pre- and post-divestiture performance is similar, while the remainder underwent changes that do not appear to be divestiture related.  Overall, the results are consistent with the view that the divestitures maintained the pre-transaction level of competition.