An acquisition in the Nordic ferry market: rivalry or coordination on capacity?

Abstract

The purpose of this article is to test the effect of Color Line’s acquisition of Larvik Line in September 1996. We formulate theoretical predictions for the changes in sales, capacity and capacity utilisation following an acquisition, and use econometric techniques to test these predictions. From descriptive statistics we observe some changes in sales and capacity utilisation following the acquisition. When testing empirically we do find some weak evidence for changes in sales and capacity utilisation following the acquisition. In particular, there are some evidence suggesting that the firms involved in the acquisition did reduce their sales. We are not able to determine empirically the toughness of price competition in this industry.