The new merger guidelines of the department of justice

The statement of antitrust enforcement criteria regarding mergers issued by the Justice Department in June 1982 embodies not only a significant change in policy but also an important improvement in the quality of the underlying economic analysis. The statement clearly sets forth the overall objective of the policy, its underlying rationale, and the criteria to be followed in deciding whether to proceed against horizontal and non-horizontal mergers respectively. As compared with the 1968 Guidelines, the new statement devotes less attention to long-term economic effects, contemplates a more extensive “behind-the-scenes” consideration of economic benefits, and confines probable challenge to a smaller range of transactions. Neither set of criteria provides a satisfactory basis for predicting the actual incidence of enforcement; neither is based on a demonstration that the implied policy will probably produce net economic benefit. The valuable contribution of the new statement to both law and economics is its realistic treatment of the problem of market definition.