Judicial Response to the 2010 Horizontal Merger Guidelines

Review of Industrial Organization - We study how the courts have responded to the 2010 Horizontal Merger Guidelines issued by the U.S. Department of Justice and the Federal Trade Commission....     

The Efficiencies Defense in the 2010 Horizontal Merger Guidelines

We analyze the efficiencies defense that is contained in the 2010 Merger Guidelines, which provides the most current statement of the Agencies?? enforcement philosophy and procedure. Most of our attention centers on efficiencies in production, but we also address merger-specific efficiencies that may lead to improved product quality, enhanced services, or even to the introduction of entirely new products. We begin with the analytically clean case of merger-specific efficiencies that are accompanied by monopoly power. From the perspective of either consumer welfare or social welfare, this presents the welfare analysis that should guide merger policy. We, then, examine the errors that may arise due to the restricted role that efficiencies play in Section 7 enforcement. Finally, we close with some policy recommendations.     

The 2010 Revised Merger Guidelines and Modern Industrial Economics

The new Horizontal Merger Guidelines provide greater transparency into how the Department of Justice and the Federal Trade Commission staffs review horizontal mergers than did the guidelines they replaced. While they reflect some advances in economic techniques for predicting the competitive consequences of mergers (most notabley the Upward Pricing Pressure test), greater attention to costs and efficiencies could further improve merger review.     

The 2010 Horizontal Merger Guidelines After 10 Years

Review of Industrial Organization - This paper introduces the Special Issue of the Review of Industrial Organization that studies the impact of the 2010 Horizontal Merger Guidelines after 10 years...     

Coordinated Effects in the 2010 Horizontal Merger Guidelines

Recent research has highlighted the quantitative contribution to merger analysis from extending unilateral effects models to understand the payoffs to future potential coordinated effects. Some of the emphasis of this research appears to have made its way into the 2010 Horizontal Merger Guidelines. In this paper, we demonstrate the quantification of coordinated effects in an oligopoly and procurement model, and we show that screens that are based on upward pricing pressure are not adequate in mergers where coordinated effects are a potential concern.     

Harm to Competition Under the 2010 Horizontal Merger Guidelines

In August, 2010, the Antitrust Division and the Federal Trade Commission issued new Guidelines for assessing horizontal mergers under the antitrust laws. These Guidelines were long awaited not merely because of the lengthy interval between them and previous Guidelines but also because enforcement policy had drifted far from the standards articulated in the previous Guidelines. The 2010 Guidelines are distinctive manly for two things. One is briefer and less detailed treatment of market delineation. The other is an expanded set of theories of harm that justify preventing mergers or reversing mergers that have already occurred. The 2010 Guidelines reflect a growing belief that in markets where product differentiation is minimal competition tends to be robust and the structural presumptions stated in previous Guidelines were too harsh. By contrast, where product differentiation is substantial the Guidelines?? approach tended to define markets too broadly, overlooking significantly anticompetitive possibilities. Under the 2010 Guidelines unilateral effects analysis relevant markets can be very small, often limited to three or four firms, and excluding some obvious substitutes. Markets in merger analysis are not defined for their own sake, however, but rather to ascertain whether a particular alteration in market structure covered by the merger provisions will be likely to facilitate a price increase. The 2010 Guidelines address four substantive merger concerns: exclusion, restraints on innovation, unilateral effects, and coordinated effects. The Guidelines have a separate section on mergers limiting ??innovation and product variety,?? treated mainly in the category of unilateral effects. The 2010 Guidelines are more flexible than previous Guidelines and also more catholic about the types of harms that mergers might cause and the techniques that can be used to assess them. Older Guidelines were excessively wed to methodologies that were at the forefront of applied merger analysis when they were drafted, but that tended to make the Guidelines obsolete as new methodologies became available. Not only do methodologies change, they are also specific to the situation. Further, they tend to be well developed in the literature and accessible to experts consulted by those defending a merger as well as to the government economists who employ them. To be sure, there is a tradeoff between flexibility and guidance. Often we can have more of one only by giving up some of the other, and that tradeoff is clearly present in the 2010 Guidelines.     

The Horizontal Merger Guidelines of 1992

The 1992 Horizontal Merger Guidelines of the Department of Justice and the Federal Trade Commission outline an enforcement policy which makes a long overdue break with its predecessors in awarding no decisive or predominant role to market concentration as a criterion of anticompetitive effect. However, the new policy does not provide an adequate substitute criterion: the tests that it prescribes for screening merger proposals are so specified that a potentially large proportion of anticompetitive mergers can escape challenge without showing any promise of improving efficiency. The time is ripe for a comprehensive inquiry aimed at formulating a more satisfactory policy.     

Market Definition and the Merger Guidelines

The recently issued revision of the US Horizontal Merger Guidelines, like its predecessors and mirrored by similar guidelines throughout the world, devotes substantial attention to the market definition process and the implications of market shares in the market that is selected. Nevertheless, some controversy concerning the revised Guidelines questions their increased openness toward more direct, economically based methods of predicting the competitive effects of mergers. By contrast, this article suggests that, as a matter of economic logic, the Guidelines revision can only be criticized for its timidity. Indeed, economic principles unambiguously favor elimination of the market definition process altogether.     

Effects of the 2010 Horizontal Merger Guidelines on Merger Review: Based on Ten Years of Practical Experience

Review of Industrial Organization - We assess how the 2010 Merger Guidelines have been applied by agencies and courts. We conclude that:     

Price-Performance Competition and the Merger Guidelines

While analysis of competition among differentiatedproducts has evolved under the revisions to theMerger Guidelines since 1982, it remains adhoc. This paper argues that price and performancecompetition among differentiated products is the rulerather than the exception and proposes methods toexplicitly analyze both forms of competition. Themethods address price and performance competition indemand and supply, explicitly incorporatingcompetitive responses as called for by the 1992 Guidelines. Empirical implementation is discussed for a specificmarket.     

The 1992 Horizontal Merger Guidelines: A brief critique

The 1992 Horizontal Merger Guidelines of the United States Department of Justice and the Federal Trade Commission represent an improvement over previous horizontal merger guidelines in certain respects especially in the treatment of entry. However, the 1992 Guidelines continue to suffer from problems with market definition methodology. Also, the softening of HHI presumptions and burdens and the incorporation of an increased competitive effects section seem to reduce the effectiveness of the Guidelines.The views expressed in this article are solely those of the authors and not of any state or federal agency.     

Empirical Analysis of Merger Enforcement Under the 1992 Merger Guidelines

This paper presents an analysis of merger enforcement at the Federal Trade Commission under the 1992 Merger Guidelines. The econometric analysis suggests that enforcement decisions are best predicted with the Herfindahl index when the relevant theory is collusion and the number of significant rivals when the relevant theory is unilateral effects. Evidence such as “hot” documents, customer complaints, and historical events suggestive of past competitive problems also increase the chance of a challenge. Mirror image considerations suggestive of continued post-merger competition (“cold” documents, customer support, and procompetitive events) reduce the probability of challenge in one specification. This article is based on non-public data obtained from Federal Trade Commission internal files. The Commission’s General Counsel has authorized publication of such data in aggregated form under Commission Rule 4.11(g), 16 C.F.R. 4.11(g). I would like to thank David Scheffman, Paul Pautler, Elizabeth Callison, and Jeffrey Fischer for helpful comments on the project and Anthony Alcorn, Brian Cross, Fulvio Cajina, Paul Golaszewski, Wendy Hanson, Janet Ireland, Karl Kindler, Michael Madigan, Madeleine McChesney, Joseph Remy, and especially Matthew Tschetter for research assistance in assembling the data. Of course, the analyses and conclusions set forth in this paper remain those of the author and do not necessarily represent the views of the Federal Trade Commission, any individual Commissioner, or any Commission Bureau.     

Merger Guidelines and the Limits of Our Understanding

The merger guidelines have evolved from a structural standard for determining the legality of mergers to an open-ended evaluation that attempts to predict whether some specific harm to competition is likely. These efforts have been unsuccessful; moreover, mergers generally contribute no positive economic gain. Blocking mergers that may have little or no adverse effect on competition will not cause significant economic harm; but the failure to interdict mergers that do cause harm imposes significant costs on the economy. Merger enforcement policy should return to the structural method of the 1968 Guidelines as well as impose stricter structural standards.     

The 1968 Merger Guidelines: In Praise of Committing to Restraint

The 1968 Merger Guidelines of the U.S. Department of Justice remain a model for competition agencies around the world because they courageously articulated when the Department would exercise its prosecutorial discretion by not challenging a horizontal merger.     

中美能源合作:挑战与机遇并存

长期以来,在中美两国政府、能源技术研究和学术机构的共同推动下,中美在能源领域的合作不断密切,范围不断扩大,两国之间已经建立起了卓有成效的合作机制。迄今中美两国政府推动的能源合作集中在中国的能源下游领域,核心范畴和目标是提高中国的能源使用效率。同时也应看到,伴随着对中国石油进口量上升与国际油价高企二者之间关系的关注,中美两国在能源上游和下游领域之间的矛盾开始日益突出。 美国对中国的不理解或误解更多地起源于中美两国间在国际层面能源开发政策方面的交流还不够充分。中美之间有必要从对话走向在全球范围内的合作。作为两个在能源消费和国际政治中有影响的大国,中美之间的能源合作不能仅局限于中国的能源下游领域,而应在上游和中游展开合作。当前,应通过多层次的对话,将双方面临的挑战变成机遇,主动寻求两国在有争议问题上的沟通并寻求减少摩擦的可能,促进两国在能源领域展开更为广泛、深入、有效的合作。     

Bank Mergers and the 1992 Merger Guidelines: The BankAmerica/Security Pacific Transaction

Review of Industrial Organization -     

Market Delineation under the Merger Guidelines: Monopoly Cases and Alternative Approaches

Despite the well-known Cellophane fallacy, the Merger Guidelines' market-delineation paradigm, which examines the effects of price increases above the prevailing level, has substantial utility in many monopoly cases. For monopoly cases in which the Guidelines' approach is not appropriate due to the Cellophane fallacy, no modification of that approach appears to solve the problem is a useful way. More direct methods for assessing monopoly power are likely to be preferable to structural analysis in many monopoly and merger cases.     

Department of justice and federal trade commission: Horizontal Merger Guidelines

Department of justice and federal trade commission: Horizontal Merger Guidelines     

Geographic Market Definition in the Merger Guidelines: A Retrospective Analysis

Since the initial Merger Guidelines in 1968, the Department of Justice and Federal Trade Commission have revised their merger enforcement screen over the course of six versions. This article examines the evolution of the geographic market component of the Guidelines and the economic implications of changing standards of market delineation on merger enforcement. Using an illustration from the beer industry, we chronicle the development of geographic market definition and its varying effects on merger enforcement over the past 50 years.