Horizontal Mergers Without Synergies May Increase Consumer Welfare

THE RESEARCH INSTITUTE OF INDUSTRIAL ECONOMICS

Working Paper No. 558, 2001

Horizontal Mergers Without Synergies May Increase

Consumer Welfare

by Johan Stennek

IUI, The Research Institute of Industrial Economics P.O. Box 5501

SE-114 85 Stockholm Sweden

OLh3L?|@* ih}iht `|L| 5)?ih}it

@) W?Uhi@ti L?t4ih `i*u@hi

aL@? 5|i??i!

WNW @?_ ,+

a?i ec 2ff

Devwudfw

Pdunhwv zlwk lpshuihfw frpshwlwlrq gr qrw lqgxfh d frvw0plqlpl}lqj doorfdwlrq ri surgxfwlrq ehwzhhq upv1 Wkh pdunhw*v delolw| wr udwlrqdol}h surgxfwlrq lv hyhq pruh olplwhg li frvwv duh sulydwh lqirupdwlrq wr upv1 Phujhuv lq vxfk pdunhwv jhqhudwh dq hflhqf| jdlq dvvrfldwhg zlwk wkh srrolqj ri lqirupdwlrq1 Qrw rqo| pd| frvwv eh uhgxfhg/wkh sulfh ohyho dqg sulfh yduldelolw| pd| dovr ghfolqh dqg frqvxphuv pd| wkxv jdlq1

Nh|zrugv= krul}rqwdo phujhu/zhoiduh/dv|pphwulf lqirupdwlrq

MHO= O43/J67/G76/G;5

_{L dp judwhixo wr Hulf ydq Gdpph/Khquln Kruq/Kdudog Odqj/Oduv Shuvvrq dqg Iudqn}

Yhueryhq/iru khosixo glvfxvvlrqv1 L dovr wkdqn vhplqdu sduwlflsdqwv dw wkh Lqvwlwxwh iru Lqwhu0 qdwlrqdo Hfrqrplf Vwxglhv +Vwrfnkrop,/Hfrqrphwulf Vrflhw| Hxurshdq Phhwlqj +Lvwdpexo,/ Hxurshdq Hfrqrplf Dvvrfldwlrq Dqxdo Phhwlqj +Lvwdpexo,/dqg Hxurshdq Dvvrfldwlrq iru Uh0 vhdufk lq Lqgxvwuldo Hfrqrplfv +Ylhqqd,1 L*p judwhixo wr Fkulvwlqd O‚rqqeodg iru fruuhfwlqj wkh odqjxdjh1 L wkdqn Mdq Zdoodqghu rfk Wrp Khgholxv Irxqgdwlrq iru qdqfldo vxssruw1 Srvwdo dgguhvv= Uhvhdufk Lqvwlwxwh iru Lqgxvwuldo Hfrqrplfv +LXL,/S1R1 Er{ 8834/VH0447 ;8 Vwrfnkrp/Vzhghq1

 W?|hL_U|L?

At T@Tih t|_it |i i*u@hi igiU|t Lu Lh3L?|@* 4ih}iht ? @ Lh?L| _LTL*) W? T@h|U*@hc W uLUt L? |i igiU| Lu @ 4ih}ih L? UL?t4ih i*u@hi |hL} |t 4T@U| L? ThUi W? }i?ih@*c |ihi t @ |i?tL? Mi|ii? |i @?|UL4Ti||i igiU|t Lu @ 4ih}ih @?_ iUi?U) }@?t 6Lh i @4T*ic @ 4L?LTL*t| U@? h@|L?@*3i ThL _U|L?c i hi@**LU@|i ThL_U|L? uhL4 }ULt| |L *LULt| T*@?|t OLiihc 6@hhi** @?_ 5@ThL Ebbf _i4L?t|h@|i |@| u @ 4ih}ih }i?ih@|it ?L t)?ih}itc _i€?i_ @t ULt| t@?}t ? @__|L? |L h@|L?@*3@|L?c | @*@)t h@tit ThUi @?_ hi_Uit UL?t4ih i*u@hi *|L} 6@hhi** @?_ 5@ThL UL?t_ih @ 4L_i* | € i_ ULt|tc |ih hit*| t i@t*) }i?ih@*3i_ |L ?U*_i ULt| @h@M*|) @t *L?} @t ?uLh4@|L? t UL4T*i|i 5?Ui |i ThUi EUL?t4ih |*|) @u|ih @ 4ih}ih t }ih E*Lih |@? |i ThUi E|*|) MiuLhi @ 4ih}ih uLh iih) ULt| UL?|?}i?U)c |i i TiU|i_ ThUi E|*|) 4t| Mi }ih E*Lih @*tL i? ULt| @hit Lih |4i

W? UL?|h@t|c |i Thiti?| t|_) tLt |@| u €h4t< ULt|t @hi Th@|i !?L*i_}ic @ 4ih}ih 4@) _iUhi@ti |i i TiU|i_ 4@h!i| ThUic @*tL |L| t)?ih}it Ai _gihi?Ui Mi|ii? 6@hhi** @?_ 5@ThL<t @?_ 4) hit*|t t _i |L Lh _gihi?| 4L_i*t Lu |i Thi4ih}ih t|@|L? W| t i**!?L? |@| €h4t | *L 4@h}?@* ULt|t ThL_Ui 4Lhi |@? €h4t | } 4@h}?@* ULt|tc @ Ti?L4i?L? i 4@) U@** 4@h!i|?_Ui_ h@|L?@*3@|L? Ai !i) TL?| Lu |i Thiti?| T@Tih t |@| |i 4@h!i| ?_Uit *itt h@|L?@*3@|L? ?_ih ?UL4T*i|i |@? ?_ih UL4T*i|i ?uLh4@|L? `i? @ €h4 @t @ } ULt|c | T*@?t @ t4@** L|T| N?_ih UL4T*i|i ?uLh4@|L?c |i UL4Ti||Lht @?|UT@|i |t @?_ i T@?_ |ih L|T| Uc ? |h?c hi_Uit hit_@* _i4@?_ |L |i }ULt| €h4 L?ti^i?|*)c @ }ULt| €h4 @*tL |i?_t |L 4ii| @ *L hit_@* _i4@?_ @?_ t ?_Ui_ |L hi_Ui L|T| ii? uh|ih 5U 4@h!i| ?_Ui_ h@|L?@*3@|L? U@??L| LUUh u ULt|t @hi Th@|i !?L*i_}i @?_ |tc 4ih}iht }i?ih@|i @? i |h@ iUi?U) }@? ? 4@h!i|t | @t)44i|hU?uLh4@|L?c _i |L TLL*?} Lu ?uLh4@|L?

W? 4@h!i|t | U|@|?} ULt|tc |i ThUi @*tL U|@|itc @?_ UL?t4ih i*u@hi U@??L| Mi ii_ @t @ u?U|L? Lu |i ThUi *ii* L?*) t @ uh|ih UL4T*U@|L?c UL?t4iht _L ?L| ?@4M}Lt*) *!i Lh _t*!i ThUi U|@|L?t ? |i L?i @?_c UL?t4iht M) 4Lhi i? |i ThUi t *Lc @?_ *itt i? | t } Ai) 4@) UL?t4i |i t@4i @ih@}i @4L?| @t ?_ih t|@M*i ThUitc M| @| @ *Lih @ih@}i i Ti?_|hi EThUi |4it ^@?||) ? |i L|ih @?_c ThUi U|@|L?t Uhi@|i @ U|@|?} hi@* ?UL4ic U t _t*!i_ u UL?t4iht @hi ht!@ihti Ai ht! igiU| _L4?@|it |i tMt|||L? igiU| u UL?t4iht @hi t|hL?}*) ht! @ihtic |i }LL_ UL?t|||it @ *@h}i i Ti?_|hi t@hi @?_ _i4@?_ t ?i*@t|U W ** tL |@| @ 4ih}ih hi_Uit ThUi U|@|L?tc t?Ui |i 4?44 Lu |L ULt|t EU _i|ih4?it |i 4L?LTL*) ThUi U|@|it *itt |@? |i t4 Lu |L ULt|t EU _i|ih4?it |i _LTL*) ThUi t @ hit*|c @ 4ih}ih 4@) ?Uhi@ti UL?t4ih i*u@hic ii? |L| hi_U?} |i ThUi *ii*

W4T*U@|L?t uLh 4ih}ih UL?|hL* @?_ |i tLU@**i_ iUi?U) _iui?Ui @hi tTi**i_ L| ? |i UL?U*_?} tiU|L?

2 Ai L_i*

L?t_ih @? ?_t|h) | |L €h4t  ' c 2 Ai }LL_ t L4L}i?iLt @?_ tL*_ @| |i 4@h!i|U*i@h?} ThUic }i? M) |i ?ihti _i4@?_ u?U|L? R ' k^^2

,@U €h4 L?t L?i T*@?|c | UL?t|@?| hi|h?t |L tU@*i Ai 4@h}?@* ULt| ? @ T*@?|c _i?L|i_ Sc t t|LU@t|U @?_ _t|hM|i_ L? dSuc SMo | 4L4i?|t

.S ' > k @?_ @o iSj ' j2_{ AL i?thi TLt|i i^*Mh4 ^@?||itc | t}

@tt4i_ |@| SM  2k*n>*  4ih}ih 4i@?t |@| |i |L T*@?|t @hi LTih@|i_

|? |i t@4i €h4 W @tt4i |@| |i ULt|t @hi _i?|U@**) @?_ ?_iTi?_i?|*) _t|hM|i_ Lih T*@?|tc ?_iTi?_i?| Lu L?ihtT W? hi@*|)c _Lt)?Uh@tit 4}| @| *i@t| T@h|*) t|i4 uhL4 _gihi?| 4@?@}i4i?| t|)*itc tL |@| @ 4ih}ih L*_ ?Uhi@ti |i ULhhi*@|L? Mi|ii? |i |L ULt|t Wu |@| t |i U@tic |i hit*|t |L uL**L L*_ Mi i@!i?i_

6h4t !?L |ih L? ULt|t MiuLhi ULLt?} ^@?||it OLiihc |i) _L ?L| !?L |ih UL4Ti||Lh<t ULt|c L?*) |i ULt| _t|hM|L? Oi?Uic |i ?|ih@U |L? 4t| Mi @?@*)3i_ @t @ }@4i | ?UL4T*i|i ?uLh4@|L? W? @ @)it@? @t i^*Mh4c €h4  ULLtit @ tTT*) u?U|L? ^ESc tL @t |L 4@ 43i

|i i TiU|i_ ThL€|c .Sdk  ^ ^ES  So ^c }i? |i tTT*) u?U|L? ULti?

M) |i UL4Ti||Lhc ^ES 6h4 <t i^*Mh4 ^@?||) t }i? M) ^ES '

 Ek  >   2ES > Ai _LTL*) ThUi t R__{ES '}  Ek n 2> n  2 [  ES >  E

Ai U@*U*@|L?t @hi t|@?_@h_ @?_ |ihiuLhi L4||i_

 4ih}ih }it |i 4L?LTL*t| |i LTTLh|?|) |L h@|L?@*3i ThL_U|L? @| i@U TL?| ? |4i Bi? @ |L|@* ThL_U|L?c ^c |i 4L?LTL*t| @**LU@|it ThL _U|L? Mi|ii? T*@?|t tL @t |L 4?43i |i ThL_U|L? ULt|tc S^ES n S2^2ES

`| UL?t|@?| hi|h?t |L tU@*ic |i 4L?LTL*t| t4T*) @**LU@|it @** ThL_U|L? |L |i T*@?| | |i *Lit| ULt| L?ti^i?|*)c |i 4L?LTL*t|<t |iU?L*L}) @t UL?t|@?| hi|h?t |L tU@*i @?_ t U@h@U|ih3i_ M) |i t|LU@t|U 4@h}?@* ULt| S  4? iSc S2jc U t |i tLU@**i_ €ht|Lh_ih t|@|t|U Ai 4i@? t _i?L|i_

M) > @?_ @h@?Ui t _i?L|i_ M) j2 _{ETTi?_  Ai 4ih}ih _Lit ?L| }i?}

ih@|i @?) t)?ih}itc _i€?i_ @t ULt| t@?}t ? @__|L? |L h@|L?@*3@|L? Ai 4L?LTL*) ULLtit |i tTT*) u?U|L? ^6_{ES tL @t |L 4@ 43i |i 4L?LTL*)}

ThL€| Ek  ^  S ^ Ai 4L?LTL*) ThUi t }i? M) R6_{ES '} 

2



k n >n₂S  > E2 Ai U@*U*@|L?t @hi t|h@}|uLh@h_ @?_ |ihiuLhi L4||i_

2 Ai ,giU| Lu ih}ih L? |i hUi wii*

AL u@U*|@|i |i UL4T@htL? Mi|ii? _LTL*) @?_ 4L?LTL*) ThUitc UL?t_ih @*tL @? ?|ih4i_@h) U@tic ?@4i*) @ )TL|i|U@* 4L?LTL*t| |@| _Lit ?L| @**L

?uLh4@|L?t@h?} Mi|ii? |i |L T*@?|t 5U @ 4L?LTL*t| L*_ ti|

h

R ES ' E*2Ek n > n E*2ES > n E*2ES2 >c E

| .R ' E*2Ek n >h

Ai i TiU|i_ 4L?LTL*) ThUi 4@) Mi h||i? @t .R6 _' 

2Ek n >n2



>  >c ihi |i €ht| |ih4 i^@*t .Rc i |i )TL|i|U@* i TiU|i_ 4L?LTL*) ThUi |@|h

L*_ hit*| u |i 4L?LTL*t| LTih@|i_ |i |L T*@?|t tiT@h@|i*) Ai tiUL?_ |ih4 t |i hi_U|L? ? ThUi _i |L h@|L?@*3@|L? uL**L?} uhL4 ?uLh4@|L? TLL*?} Ai i TiU|i_ _LTL*) ThUi t }i? M) .R__' 

k n 2> Ai U@?}i ?

|i i TiU|i_ ThUi @t @ hit*| Lu |i 4ih}ih 4@) |i? Mi _iUL4TLti_ ?|L .R6_{ .R}__'  SEk  > n  2  >  > Ee Ai €ht| |ih4 t TLt|i @?_ U@T|hit |i 4@h!i| TLih igiU| Lu |i 4ih}ihc |i tiUL?_ t ?i}@|i @?_ U@T|hit |i igiU| Lu h@|L?@*3@|L? #iTi?_?} L? |i UhU4t|@?Uitc i|ih igiU| U@? _L4?@|i Wu |i ULt| @h@M*|) t t4@** i?L} j2 2

bEk  >2c @ 4ih}ih h@tit |i i TiU|i_ ThUi W? T@h|U*@hc u |ihi t

?L ?Uih|@?|)c |i? |i Thiti?| 4L_i* t @ tTiU@* U@ti Lu 6@hhi** @?_ 5@ThL<t 4L_i*c @?_ @ 4ih}ih ** @*@)t h@ti |i Ei TiU|i_ ThUi

L?t_ih ?L @? i @4T*i ihi ?Uih|@?|) t *@h}i Ai ULt| t i|ih } S '  Lh *L S ' f Ai ThLM@M*|) Lu @ } ULt| t Z ' *e wi| k ' D*e `| @ |LTL?| _t|hM|L?c |i ThUi t i|ih } Ei? ESn S2 *2 ' c

4i_4 Ei? ESn S2 *2 ' *2c Lh *L Ei? ESn S2 *2 ' f Ai @ttLU@|i_

ThLM@M*|it @hi Z2 _{' b*Sc 2Z E  Z ' S*Sc @?_ E  Z}2 _{' *S N?_ih}

_LTL*)c ThUit @hi DS*eHc 2*eH @?_ H*eHc hit*|?} ? |i i TiU|i_ ThUi .R_ _'

.fe*.SH N?_ih 4L?LTL*)c ThUit @hi De*eHc f*eH @?_ f*eHc hit*|?} ? |i i TiU|i_ ThUi .R6 _{' SbS*.SH Oi?Uic}

4_{Wr vhh wklv/uvw qrwh wkdw wkh sulfh lv lqfuhdvhg li/dqg rqo| li/ ? +  , @6 1 Vhfrqg/}

xvh wkh idfw wkdw    ?4 5

s

55 _{dv lv vkrzq lq Dsshqgl{ D/Ohppd 61} D

hLTLt|L?  Wu ULt|t @h) tUi?|*)c @ 4ih}ih |L| t)?ih}it 4@) hi_Ui |i i TiU|i_ ThUi

hLTLt|L?  tLt |@| 6@hhi** @?_ 5@ThL<t hLTLt|L? 2 _Lit ?L| @TT*) |L ? UL4T*i|i ?uLh4@|L? 4@h!i|t AL Mi||ih ?_iht|@?_ |i hi*@|L? Mi|ii? 6@hhi** @?_ 5@ThL<t hit*|t @?_ 4?ic ?L|i |@| |i 4@h!i| ?_Uit *itt h@|L?@*3@|L? ?_ih ?UL4T*i|i |@? ?_ih UL4T*i|i ?uLh4@|L? `i? @ €h4 @t } ULt|tc | T*@?t @ t4@** L|T| N?_ih UL4T*i|i ?uLh4@|L?c UL4Ti||Lht @?|UT@|i |t @?_ i T@?_ |ih L|T| Uc ? |h?c hi_Uit hit_@* _i4@?_ |L |i }ULt| €h4 L?ti^i?|*)c @ }ULt| €h4 @*tL |i?_t |L 4ii| @ *L hit_@* _i4@?_c @?_ t |t ?_Ui_ |L hi_Ui L|T| ii? uh|ih 5U 4@h!i| ?_Ui_ h@ |L?@*3@|L? U@??L| LUUh u ULt|t @hi Th@|i !?L*i_}i Atc ? @t)44i|hU ?uLh4@|L? 4@h!i|tc @ 4ih}ih 4@) }i?ih@|i @? @__|L?@* ULt| hi_U|L? }@? @?_ i?Uic @ ThUi hi_U|L? }@?c _i |L TLL*?} Lu ?uLh4@|L?

?L|ih @) Lu ?_iht|@?_?} |i hit*| t |L UL4T@hi |i _LTL*) ThUic }i? M) i^@|L? Ec | |i 4L?LTL*) ThUic }i? M) i^@|L? E2c |L €?_ |i ULt| UL?|?}i?Uit ?_ih U @ 4L?LTL*t| L*_ U@h}i @ *Lih ThUi |@? @ _LTL*) 5?Ui |i 4L?LTL*t| TihuiU|*) h@|L?@*3it ThL_U|L?c |i 4L?LTL*) ThUi _iTi?_t L?*) L? |i *Lit| 4@h}?@* ULt| S ' 4? iSc S2j @| iih) ULt|

UL?|?}i?U) N?_ih _LTL*)c Liihc |i }ULt| T*@?| @*tL ThL_Uit @?_ UL? ti^i?|*)c |i _LTL*) ThUi @*tL _iTi?_t TLt|i*) L? S ' 4@ iSc S2j L?t_ih

|i i Tih4i?| Lu ?Uhi@t?} S @| @ }i? S Ai _LTL*) ThUi t |i? ?Uhi@ti_ |L| @giU|?} |i 4L?LTL*) ThUi | tL4i TL?|c |i _LTL*) ThUi i Uii_t |i 4L?LTL*) ThUi @?_ ? T@h|U*@hc | U@? Mi tL? |@| R6_{ES R}__{ESc i?}

iih S : 

k n 2>

OLh3L?|@* 4ih}iht |L| t)?ih}it 4@) @*tL hi_Ui |i ThUi u |i €h4t @hi ?L*i_ ? |@U| UL**tL? ThLh |L |i 4ih}ihc @t tL? M) VihMLi? EbbD Ai €ht| hi@tL? t |@| @*hi@_) @| |i L|ti|c |i €h4t @i 4U  4@h!i| TLih Ai tiUL?_ hi@tL? t |@|c |L| t_iT@)4i?|tc |i U@h|i* U@??L| h@|L?@*

3i ThL_U|L? @t iUi?|*) @t |i ?|i}h@|i_ €h4c Lh ii? |i 4@h!i| ?_ih UL4Ti||L?

22 Ai ,giU| Lu ih}ih L? L?t4ih `i*u@hi

W? 4@h!i|t | U|@|?} ULt|tc |i ThUi @*tL U|@|itc @?_ UL?t4ih i*u@hi U@??L| Mi ii_ @t @ u?U|L? Lu |i ThUi *ii* L?*)( ThUi @h@M*|) t @*tL 4TLh|@?| W? u@U|c

wi44@   U@h|i* _iUhi@tit ThUi @h@M*|)

Ai ThLLu t hi*i}@|i_ |L TTi?_  ,tti?|@**)c |t t _i |L |i @h@M*|) Lu |i ThUi ?_ih UL4Ti||L? Mi?} _i|ih4?i_ M) |i @h@M*|) Lu |i t4 Lu |i |L E?_iTi?_i?| ULt|tc *i |i @h@M*|) Lu |i U@h|i* ThUi t _i|ih4?i_ M) |i @h@M*|) Lu L?i ULt| L?*)

t @ uh|ih UL4T*U@|L?c UL?t4iht _L ?L| ?@4M}Lt*) *!i Lh _t*!i ThUi U|@|L?t AL Mi 4Lhi ThiUtic |i *?i@h 4@h!i| _i4@?_ u?U|L? U@? Mi _ihi_ uhL4 |*|) 4@ 43@|L? u UL?t4ih Thiuihi?Uit @hi _i?|U@*c ^@t *?i@h @?_ ^@_h@|U? ^ Oi?Uic ?_hiU| |*|) t }i? M) T ERc 6 ' t 

2Ek  R2n 6



c ihi 6 _i?L|it UL?t4ih ?UL4ic @?_ t t @ t|hU|*) ?Uhi@t?} u?U|L? Ai

|*|) u?U|L? t @tt4i_ |L t@|tu) |i L? i4@??  Lh}i?t|ih? ThLTih|)c tL |@| UL?t4ih i*u@hi U@? Mi i@*@|i_ M) i TiU|i_ |*|)2 _{Ai U @?}i ?}

i TiU|i_ |*|)c _i |L @ U@?}i ? ThUi _t|hM|L?c U@? Mi @TThL 4@|i_ M) .T ER6_{c 6  .T} _R__{c 6}_ % .R6_{ .R}_ e R & n4R 2 5 7@o iR6j  @o q R_r e R2 6 8_{ ED}

Ai uLh4*@ t _ihi_ t?} @ tiUL?_ _i}hii A@)*Lh @TThL 4@|L? Lu |i ?_hiU| |*|) u?U|L? @hL?_ @ ThUi R EiMih) @?_ 5|}*|3c bH Ai U@?}i ?e

i TiU|i_ |*|) L?*) _iTi?_t L? |i ETihUi?|@}i U@?}i ? |i i TiU|i_ ThUic 5_{Wkh h{shfwhg frqvxphu vxusoxv lv qrw d jrrg phdvxuh ri frqvxphu zhoiduh/xqohvv frq0}

vxphuv duh ulvn0qhwudo dqg wkh lqfrph hodvwlflw| ri ghpdqg lv }hur +Vwhqqhn/4<<<,1

@?_ @ Ehi*@|i U@?}i ? ThUi @h@M*|) Ai L?*) T@h@4i|ih Lu |i @TThL 4@ |L?c 4Rc t |i ULiUi?| Lu hi*@|i ThUi ht! @ihtL? Ah?Lt!)c 5@*|c @?_

5U4|3 EbHf ThLi @? _i?||) |@| *?!t ThUi ht! @ihtL? |L 4Lhi u@4*@h UL?UiT|t W? |i Thiti?| UL?|i |c ihi |i ?UL4i i*@t|U|) Lu _i4@?_ t 3ihLc

4R  0  r  46c ES

ihi 0 t |i ThUi i*@t|U|) Lu _i4@?_c r t |i i Ti?_|hi t@hic @?_ 46t |i

ULiUi?| Lu hi*@|i ?UL4i ht! @ihtL? L?ti^i?|*)c |i ThUi ht!@ihtL? U@? Mi _iUL4TLti_ ?|L |L igiU|tG |i RtMt|||L? igiU| @?_ |i Rht! igiU| Wu _i4@?_ t*LTit _L?@h_c |i tMt|||L? igiU| 4@!it UL?t4iht u@Lh@M*i |L ThUi ht!c t?Ui |i) M) @ *@h}i ^@?||) i? |i ThUi t *L @?_ @ t4@** ^@? ||) i? |i ThUi t } Oi?Uic |i) 4}| M) |i t@4i i TiU|i_ @4L?| @t ?_ih t|@M*i ThUitc M| @| @ *Lih i TiU|i_ i Ti?_|hi EThUi |4it ^@?||) Ai tiUL?_ igiU| 4@!it E?UL4i ht!@ihti UL?t4iht @*tL _t*!i ThUi ht!c t?Ui @h@|L?t ? |i ThUi Uhi@|i @h@|L?t ? hi@* ?UL4ic ? ThLTLh|L? |L |i i Ti?_|hi t@hic @?_ |@| tU ?UL4i @h@|L?t @hi i@*@|i_ @UULh_?} |L ?UL4i ht! Thiuihi?Uit L?ti^i?|*)c |i ?i| igiU| t @4M}Lt

hLTLt|L? 2 Wu UL?t4iht @hi tUi?|*) ht!@ihti E|L@h_ ?UL4i ht!c @?_ u |i i Ti?_|hi t@hi Lu |i UL44L_|) t tUi?|*) *@h}ic @ 4ih}ih ? Uhi@tit i TiU|i_ UL?t4ih i*u@hi M) hi_U?} ThUi @h@M*|)c ?_iTi?_i?| Lu |i igiU| L? |i ThUi *ii*

Ai ThLLu uL**Lt 44i_@|i*) uhL4 |i u@U| |@| @?) 46 t UL4T@|M*i | @?)

}i? _i4@?_ u?U|L?c @?_ |@| r U@? Mi uhii*) @hi_ M) @h)?} ?UL4ic 6c |L| @giU|?} _i4@?_ ) i4T*L)?} @ 4Lhi i M*i _i4@?_ tUi_*ic | t @*tL TLttM*i |L t|_) |i igiU| Lu |i ThUi @?_ ?UL4i i*@t|U|it Lu _i4@?_

Ai T@Tih tLt |@| |L @ttitt |i i*u@hi igiU | Lu @ 4ih}ihc | t 4TLh|@?| |L ?U*_i |i igiU| L? ThUi @h@M*|) AL i@*@|i |t igiU|c |i t3i Lu |i 6_{Frqvxphu ulvn0suhihuhqfhv wrzdug sulfh ulvn duh uhsuhvhqwhg e| wkh frhflhqw ri uhodwlyh}

sulfh0ulvn dyhuvlrq/ s@ +Yss+s> p,  s, @Ys+s> p,1 H

4@h!i| @t 4i@thi_ M) r @?_ UL?t4ih ht!Thiuihi?Uit @t 4i@thi_ M) 46 4t|

Mi ?U*_i_

 L?U*tL?t

Ai iUL?L4U *|ih@|hi ThL_it tiih@* @h}4i?|t ) UL4Ti||L? @|Lh |it tL*_ M@*@?Ui |i @?|UL4Ti||i igiU|t Lu 4ih}iht @}@?t| |ih iUi?U) }@?t `**@4tL? EbSH tit @ ULt|Mi?i€| @?@*)tt |L tL |@| Lh3L?|@* 4ih}iht 4@) ?Uhi@ti tLU@* i*u@hi u |i) t@i L? ULt|t 6@hhi** @?_ 5@ThL Ebbf t|_) 4ih}ih ? @ Lh?L| 4L_i* @?_ tL |@| UL?t4iht 4@) @*tL }@?c u |i 4ih}ih }i?ih@|it ULt| t)?ih}it Ai iUL?L4U *|ih@|hi @*tL ThL _it Th@U|U@* |LL*t uLh 4@!?} |i |h@_iLg Mi|ii? @?|UL4Ti||i igiU|t @?_ iUi?U) }@?tc tU @t t4*@|L? @?@*)tt E`ih_i? @?_ 6hLiMc bbe( W@*_ @?_ VihMLi?c 2ff @?_ iUL?L4i|hU |iU?^it |L it|4@|i |i T@ttL? Lu €h4 tTiU€U ULt| t@?}t Eti?ui*|ihc t4Lhic @!ih @?_ Ukih4@?c bbH

Ai iUL?L4U @?@*)tt ? |t €i*_ @t @_ tL4i 4T@U| L? TL*U) AL_@)c ti ih@* 4ih}ih UL?|hL* t)t|i4t ? |i ,# @**L @ tLU@**i_ iUi?U) _iui?Uic @? i @4T*i Lu U t |i N5 | |t 6i_ih@* ih}ih B_i*?it Ai €ht| hi*i@tit Lu |i B_i*?it ? bSH @?_ bH2 LTTLti_ iUi?U) UL?t_ih@|L?t ?*itt ?_ih i UiT|L?@* UhU4t|@?Uit Ai *@|ih hi*i@tit Lu |i B_i*?it ? bHe @?_ bb2 EU t t|** ? ti |L_@) hii@* @ 4Lhi t)4T@|i|U |hi@|4i?| Lu iUi?U) U*@4t W? ,hLTic Liihc 4ih}ih TL*U) t t|** ?U*i@h @t UL?Uih?t |i hL*i Lu iUi?Uit E+L**ihc 5|i??i! @?_ VihMLi?c 2fff( 5|i??i! @?_ VihMLi?c 2ff

Ai Thiti?| T@Tih _i4L?t|h@|it |i 4TLh|@?Ui Lu @ ti| Lu ThiLt*) ?i }*iU|i_ UhU4t|@?Uit i? @ttitt?} |i igiU|t Lu Lh3L?|@* 4ih}iht W? 4@h !i|t ihi €h4t< ULt|t @hi Th@|i ?uLh4@|L?c 4ih}iht }i?ih@|i iUi?U) }@?t @ttLU@|i_ | TLL*?} Lu ?uLh4@|L? AL |@!i |iti }@?t ?|L @UUL?|c | t ?iUitt@h) |L @ttitt |i _i}hii |L U ULt| tLU!t @hi _Lt)?Uh@|U @?_ ?uLh 4@|L? t @t)44i|hU( |i _i}hii Lu UL?t4ih ht!@ihtL? @?_ |i t3i Lu |i

4@h!i| 5?Ui ?uLh4@|L? t }i?ih@**) 4TihuiU|c @?_ 4@) Lu|i? Mi ih) *4|i_c |iti i |i?tL?t tii4 |L Mi Lu 4TLh|@?Ui uLh @ UL4T*i|i @ttitt4i?| Lu 4ih}iht

hi*4?@hit

wi| S @?_ S2 Mi _i?|U@**) @?_ ?_iTi?_i?|*) _t|hM|i_ @UULh_?} |L |i U

4*@|i _t|hM|L? u?U|L? 8 @?_ _i?t|) s #i?L|i |i 4i@? M) > @?_ |i @h@?Ui M) j2_{ Ai €ht|Lh_ih t|@|t|U S  4? iS}

c S2j @t _i?t|) s ES '

2 d  8 ESo s ES Ai 4i@? t _i?L|i_ M) > @?_ |i @h@?Ui M) j2_{ Ai}

tiUL?_Lh_ih t|@|t|U S  4@ iSc S2j @t _i?t|) s ES ' 28 ES s ES Ai

4i@? t _i?L|i_ M) > @?_ |i @h@?Ui M) j2_

wi44@ 2 E  2> n 2> ' >( E E>  >2 '>  >2( E j2 _'  2j2 n2j2n2E>  >2n 2  >  >2 hLLu AL tii EG 

2> n 2> ' 2.S n 2.S ' 2.S n 2.S2 Oi?U i 2> n 

2> ' 2> n 2> ' > AL tii EG ti > n > ' 2> Oi?U i >  > ' >  >

AL tii EG j2 _' 

2j2 n 2j2 ' 2. ES  >2 n 2. ES2 >2 ' 2. ES  >2 n 

2. ES  >2 Oi?Ui j2 ' 2. EES  > n E>  >2n2.

 S  >n>  >2c @?_ j2 _'  2.  ES  >2n 2 ES  > E>  > n E>  >2n n 2.  S  >2n 2S  > >  >n>  >2 Oi?Uic j2 _'  2j2n2j2n2 E>  >2n  2  >  >2 wi44@  E >  > s2j2₍ E >  >  2 s 2j2_

hLLu AL tii EG >  > ' .S  .S ' . mS S2m L|i @*tL |@| mS S2m '

t

ES S22 @?_ i?Uic >  > ' .

t

ES  S22 5?Ui s t t|hU|*) UL?U@ic

|i? M) ai?ti?<t ?i^@*|)c i @i .tES S22

t

. ES S22c @?_ i?Ui

>  > t. ES S22 6h|ih . ES S22 ' . EES >  ES2 >2 ' 2j2

@?_ i?Uic >  > s2j2_{ AL tii EG L4M?i wi44@ 2 E @?_ wi44@  E}

|L }i|2>  > > s2j2_{c @?_ i?Ui >  >}  2

s 2j2_

 hLLu Lu wi44@ 

5?Ui ThUit @hi *?i@h ? ULt|tc 4L?LTL*) ThUi @h@M*|) t @o iR6_{j ' EYR}6_*YS2_{@o iSj '} 

ej2c E. @?_ _LTL*) ThUi @h@M*|) t @oqR_r_'[2 '  YR__*YS  ₂ @o iSj ' 2_ej2 EH

Oi?Uic |hii u@U|Lht _i|ih4?i |i t3i Lu |i @h@?UitG |i ti?t||) Lu ThUi |L ULt| tLU!tc |i ?4Mih Lu LTih@|i_ T*@?|tc @?_ |i @h@M*|) Lu ULt| 6ht|c |i ti?t||) Lu |i ThU i |L U Lt| tLU !t t |i t@4i ? @t)44i|hU ?uLh4@|L? _LTL*) @t ? 4L?LTL*)c |@| t YR__*YS

 ' YR6*YS ' *2 5iUL?_c @ 4ih}ih hi

_Uit |i ?4Mih Lu T*@?|t LTih@|i_ @| i@U TL?| ? |4ic U ?@4M}Lt*) |i?_t |L _iUhi@ti ThUi @h@M*|) Ah_c |i @h@M*|) Lu S 4}| Mi *@h}ih @t i** @t t4@**ih |@? |i @h@M*|) Lu Sc _iTi?_?} L? |i i @U| _t|hM|L?

L?ti^i?|*)c |ihi @hi |L TL|i?|@**) LTTLt?} igiU|t

AL u@U*|@|i |i UL4T@htL?c |i @h@M*|) Lu |i _LTL*) ThUi t hih||i? @t

@oqR_r _{' EYR}6_*YS2_{@o iSj n EYR}6_{*YS EYR}6_{*YS SJ iSc Sj n EYR}6_*YS2_{@o iSjEb}

' _ej2_n 

2SJ iSc Sj n  ej2

5?Ui SJ iSc Sj : f @?_ j2 _{: fc | uL**Lt |@| @o iR}6_{j @o}q_R_r_

+iuihi?Uit

ti?ui*|ihc h*i)( t4Lhic #@_( @!ihc aL?@|@? ( Ukih?@?c 5}?i @h)G W_i?|u)?} |i 6h45TiU€U @ttAhL} +@|ic 6A #tUttL? T@Tihc bbH

6@hhi**c aLtiT( 5@ThLc @h*G OLh3L?|@* ih}ihtG ? ,^*Mh4 ?@*)ttc 4ihU@? ,UL?L4U +ii( HfEc @hU bbfc f.2S

W@*_c @hU( VihMLi?c 6h@?!G "@?|u)?} |i ,giU|t Lu OLh3L?|@* ih}ih ? ,hLTi@? L4Ti||L? L*U)c 44iL N?iht|) Lu wii?c 2ff

iMih)c #@_  B( 5|}*|3c aLtiT ,G Ai AiLh) Lu L44L_|) hUi 5|@M*3@|L?G  5|_) ? |i ,UL?L4Ut Lu +t!c *@hi?_L? hittc  uLh_c bH

+L**ihc w@htOi?_h!( 5|i??i!c aL@?( VihMLi?c 6h@?!G ,Ui?U) B@?t uhL4 ih}ihtc +iTLh| |L |i ,hLTi@? L44ttL? E, L?|h@U| WW%bH%ffc 6iMh@h) 2fff

5|i??i!c aL@?G Ai , TiU|i_ L?t4ih<t 5hT*t @t @ `i*u@hi i@thic aLh ?@* Lu M*U ,UL?L4Utc .E2c }t| bbbc 2SD2HH

5|i??i!c aL@?( VihMLi?c 6h@?!G ih}ih L?|hL* @?_ ,?|ihThti L4Ti||i ?ittc +iTLh| |L |i ,hLTi@? L44ttL? E, L?|h@U| WWW%bb%fSDc Th* 2ff

Ah?Lt!)c 5|iTi? a( 5@*|c O@4( 5U4|3c ?_hiG L?t4ih<t 5hT*tc hUi W?t|@M*|)c @?_ L?t4ih `i*u@hic ,UL?L4i|hU@( eHEc a@? bHfc DD2

VihMLi?c 6h@?!G LhTLh@|i +it|hU|h?} ? @ L**ti *}LTL*)c W?|ih?@ |L?@* aLh?@* Lu W?_t|h@* h}@?3@|L?( Ec 5iT|i4Mih bbDc DDe

`ih_i?c Bhi}Lh) a( 6hLiMc w!i c Ai ,giU|t Lu ih}iht ? #gihi?|@|i_ hL_U|t W?_t|hitG wL}| #i4@?_ @?_ ih}ih L*U)c aLh?@* Lu w@c ,UL?L4Utc @?_ h}@?3@|L?( fE2c U|LMih bbec T@}it ef.2S

`**@4tL?c *ih ,G ,UL?L4it @t @? ?||ht| #iui?UiG Ai `i*u@hi Ah@_i Lgtc 4ihU@? ,UL?L4U +ii( DHc bSHc HS

#LU4i?|G 6@t|i