Impact of Mergers and Acquisitions on Consumers- Welfare: Experience of Indian Manufacturing Sector

In the context of introduction of deregulatory policy measures and subsequent wave of mergers and acquisitions (M&A) in Indian corporate sector since 1991, the present paper attempts to examine the welfare implications of this wave. It is found that M&A do not have any significant impact on consumers’ welfare. Instead, consumers’ welfare is significantly influenced by exports intensity, imports intensity, advertising intensity, technology related efforts, and past profitability of the firms. While the industries with higher exports orientation or greater product differentiation or better financial performance experience greater loss in consumers’ welfare, it is less in the industries with greater competition from imports or better technology. Hence, the wave of M&A in Indian manufacturing sector in the post-liberalization era may not be a matter of serious concern from consumers’ welfare point of view. Instead, in many cases, M&A can help the firms in consolidating their business and enhancing competitiveness, and this may benefit the consumers in the form of greater efficiency and lower prices. Keywords—Mergers, acquisitions, concentration, welfare, India JEL Codes—L1, L2, L4, L5