argument.

Finally, in Section 6, we will investigate the effects of mergers on product prices, using the POS (point-of-sales) retail price data. Although we could analyze only three markets due to data limitations, the results suggest post-merger price increases. Again, the result is not favorable to efficiency arguments and gives a grave concern from the competition policy viewpoint.

In this paper, we will discuss these results briefly, leaving the details to a companion paper (in Japanese only; to be published in 2011 as a CPRC Report). The mergers investigated in this paper are those that took place mainly after 2000. We confine our analysis to the mergers in the 2000s, because there are studies on the effects to profit rates of mergers in Japan in the 1980s (Odagiri and Hase, 1989; reproduced with slight modifications in Odagiri, 1992), and on the effects to profit rates, share value, and product price of mergers in the 1990s (CPRC, 2003; Fukamachi and Makino, 2004a and 2004b) $ ^{3} $ . The results in these studies gave similar pictures, that is, the lack of evidences suggesting efficiency improvements and the presence of an upward pressure in product prices $ ^{4} $ . Therefore, the popular argument in business press that the increased global competition and stagnant domestic market of Japan in the last decade or two intensified the need for industrial re-organization (meaning, usually, mergers and acquisitions) to improve efficiency seems unwarranted.

We have no intention to claim that our study is definite. It in fact has several limitations. For instance, the sample varies across studies. For the studies on profits and innovation, we needed to have financial statements both before and after the mergers and, for the share price event study, we needed share price data. Therefore, our sample is mostly confined to mergers between public firms (i.e., those listed in one or more of the stock markets in Japan). For the price study, we needed to have POS (point-of-sales) data at retailers and could secure such data for only three categories of products. The differences on samples and methodology are summarized in Table 1. Although we believe these differences can be justified in view of the suitability for each analysis and of limited data availability, comparability across studies is admittedly imperfect.

In addition, we are aware that a few other criticisms may apply to our studies. First, some of the measures of performance are hardly ideal; for instance, the number of patents may be affected not only by the R&D performance of firms but also by patentability of technological fields and the patent strategy of firms. Second, it may take a few years until a merger produces its full effect on company performance and, as a result, the three-year lag we usually used may be too short. However, one business consultant we interviewed observed that if a merger cannot achieve its target performance by the end of the third year, it is likely bound to failure, suggesting that the use of three-year lag may not be out of mark. Third, the characteristics of the sample mergers are diverse and quite a few of them are in declining industries, including those made to rescue failing companies; therefore, the lack of improvement in many cases may be the reflection of industry problems than management failure. We will discuss these issues again in the conclusion.