Merger Strategies And Antitrust Concerns

2013 ◽  
pp. 536-558 ◽  
Author(s):  
Gregory Werden ◽  
Luke Froeb
Keyword(s):  
Mergers And Acquisitions ◽  
Competitive Environment ◽  
Horizontal Merger ◽  
Antitrust Law ◽  
Horizontal Mergers ◽  
Merger Guidelines ◽  
Unilateral Effects ◽  
Modern Economic ◽  
Merger And Acquisitions ◽  
The U.S

This chapter explains the application of antitrust law to merger and acquisitions, especially horizontal transactions, which involve direct competitors. The chapter outlines the analysis the U.S. enforcement agencies set out in their Horizontal Merger Guidelines―a fact-intensive analysis focusing on the precise competitive interaction between the merging firms and the competitive environment in which they operate. The chapter focuses mainly on unilateral effects, which arise from the elimination of head-to-head competition between the merging firms. Several distinct unilateral effects are distinguished and illustrated with real-world examples. In particular, the chapter explains how modern economic analysis identifies the relatively few horizontal mergers and acquisitions found to violate antitrust law.

scholarly journals Mergers with Differentiated Products: Where Do We Stand?

2021 ◽  
Vol 58 (1) ◽  
pp. 179-212
Author(s):  
Tommaso Valletti ◽  
Hans Zenger
Keyword(s):  
Economic Analysis ◽  
Differentiated Products ◽  
Horizontal Merger ◽  
10Th Anniversary ◽  
Merger Guidelines ◽  
Competitive Effects ◽  
Unilateral Effects ◽  
Market Shares ◽  
Differentiated Product Markets

AbstractOn the occasion of the 10th anniversary of the 2010 U.S. Horizontal Merger Guidelines, this article provides an overview of the state of economic analysis of unilateral effects in mergers with differentiated products. Drawing on our experience with merger enforcement in Europe, we discuss both static and dynamic competition, with a special emphasis on the calibration of competitive effects. We also discuss the role of market shares and structural presumptions in differentiated product markets.

scholarly journals Judicial Response to the 2010 Horizontal Merger Guidelines

2021 ◽  
Vol 58 (1) ◽  
pp. 51-79
Author(s):  
Carl Shapiro ◽  
Howard Shelanski
Keyword(s):  
Federal Trade Commission ◽  
Case Law ◽  
Market Concentration ◽  
Horizontal Merger ◽  
Average Increase ◽  
Department Of Justice ◽  
Merger Guidelines ◽  
Direct Competition ◽  
The Government ◽  
The U.S

AbstractWe 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. Looking at decided cases, we find that both the government and merging parties rely on the 2010 Guidelines in presenting their cases, each side respectively arguing that it should win if the court properly follows them . The 2010 Guidelines had the strongest effect on the case law in the area of unilateral effects, where a number of courts have embraced them in ways that clearly depart from earlier decisions. The case law now exhibits much greater receptivity to a government showing that the merger will lead to higher prices simply due to the loss of direct competition between the two merging firms. The courts also have followed the 2010 Guidelines by more willingly defining markets around targeted customers. We do not detect any effect on decided cases of the higher concentration thresholds found in the 2010 Guidelines. Both the average pre-merger level of market concentration and the average increase in market concentration alleged by the government in litigated cases to date declined after 2010 .

Deregulating antitrust policy

2020 ◽  
Vol 44 (4) ◽  
pp. 871-890 ◽  
Author(s):  
Mark Stelzner ◽  
Mayuri Chaturvedi
Keyword(s):  
Income Inequality ◽  
Mergers And Acquisitions ◽  
Market Power ◽  
Market Concentration ◽  
Antitrust Policy ◽  
Horizontal Merger ◽  
Department Of Justice ◽  
Economic Variables ◽  
Merger Guidelines ◽  
Half Century

Abstract Starting in the 1980s, market concentration began to rise dramatically decreasing competition and increasing market power for the firms that remain. Such developments have important effects on a number of economic variables such as the efficiency of our economy and income inequality. Thus, it is important to ask: how has the administration of antitrust policy changed over the last half century? To shed more light on these important questions, we explore both change in policy outline by the Department of Justice in its Horizontal Merger Guidelines and change in administrative actions looking at both secondary requests for mergers and acquisitions of different sizes, and pre, post and change in Herfindahl–Hirschman Index in mergers and acquisitions contested by the Department of Justice through the courts.

The U.S. Horizontal Merger Guidelines After One Half Century

2018 ◽  
Vol 63 (1) ◽  
pp. 137-151
Author(s):  
Gilbert B. Becker
Keyword(s):  
Supreme Court ◽  
Horizontal Merger ◽  
Merger Guidelines ◽  
Half Century ◽  
The U.S ◽  
Agency Policy

The U.S. antitrust agencies’ Horizontal Merger Guidelines are approaching their half century mark, having progressed through three earlier versions to their current 2010 form. Recent reports promote the contention that the enhanced sophistication and transparency of the newer versions have led to improved policy results. This study questions this conclusion by examining recent retrospective merger case evidence as well as agency policy and practices, in light of long-held Supreme Court dicta.

Efficiency Defense in EU and US Horizontal Merger Control if Costs are Endogenous

2016 ◽  
Vol 17 (1) ◽  
pp. 48-60
Author(s):  
Manfred Neumann
Keyword(s):  
Profit Maximization ◽  
Consumer Surplus ◽  
Merger Control ◽  
Horizontal Merger ◽  
Fixed Costs ◽  
Horizontal Mergers ◽  
Merger Guidelines ◽  
Eu And Us ◽  
Profit Maximizing ◽  
Total Welfare

Abstract If fixed costs are endogenous, following from profit maximization, horizontal mergers are always profitable. They cause the price to rise and consumer surplus to decrease. A case of horizontal merger in which, according to the requirement of US and EU Merger Guidelines for an efficiency defense to be acceptable, the price declines or remains constant does not exist and therefore cannot be expected by profit maximizing partners to arise following a merger. Merger control should be guided by focusing on total welfare. Permitting cooperation in R&D, although profitable, is likely to be detrimental to welfare.

scholarly journals The 2010 Horizontal Merger Guidelines After 10 Years

2021 ◽  
Author(s):  
Joseph Farrell ◽  
Carl Shapiro
Keyword(s):  
Federal Trade Commission ◽  
Analytical Techniques ◽  
Economic Research ◽  
Horizontal Merger ◽  
Horizontal Mergers ◽  
Special Issue ◽  
Department Of Justice ◽  
Substantial Impact ◽  
Merger Guidelines ◽  
The Impact

AbstractThis paper introduces the Special Issue of the Review of Industrial Organization that studies the impact of the 2010 Horizontal Merger Guidelines after 10 years On August 19, 2010, the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued newly updated Horizontal Merger Guidelines (2010 Guidelines) [See https://www.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf.]. The 2010 Guidelines begin by stating: “These Guidelines outline the principal analytical techniques, practices, and the enforcement policy of the Department of Justice and the Federal Trade Commission (the “Agencies”) with respect to mergers and acquisitions involving actual or potential competitors (“horizontal mergers”) under the federal antitrust laws.” Since the first Merger Guidelines were issued by the DOJ 1968, the merger guidelines have been an important channel by which economic research and learning affects antitrust enforcement. Each iteration of the merger guidelines has reflected the economic thinking of the day. Each iteration also has made a substantial impact on merger enforcement and the development of antitrust law. This special issue examines the impact of the 2010 Merger Guidelines after 10 years.

A Quantitative Methodology for Determining Relevant Geographic Markets in Higher Transportation Cost Industries

2018 ◽  
Vol 63 (4) ◽  
pp. 431-443
Author(s):  
Martino De Stefano ◽  
Joanna Tsai
Keyword(s):  
Federal Trade Commission ◽  
Transportation Cost ◽  
The Other ◽  
Horizontal Merger ◽  
Quantitative Methodology ◽  
Department Of Justice ◽  
Merger Guidelines ◽  
Loss Analysis ◽  
Actual Loss ◽  
The U.S

The U.S. Department of Justice/Federal Trade Commission Horizontal Merger Guidelines describes the hypothetical monopolist test (HMT) and significant and nontransitory increase in price (SSNIP) as tools to define antitrust markets. However, the discussion leaves some ambiguities with regards to the implementation of such tools. In this article, we present a methodology for quantitatively delineating geographic markets that is consistent with the Guidelines. In particular, for geographic markets that are based on the locations of customers, the market boundaries encompass the region into which sales are made from the merging parties’ plants, and competitors in the market are firms that sell to customers in the specified region. We use two approaches to identify the competitive reach of a plant—one based on actual shipping distances, which reflect the areas where the plant actually sells; and the other based on distances at which the plant’s product can be shipped profitably, which reflect all areas where the plant can potentially compete for customers. These distances are used to “draw circles” around plants to identify areas where one merging party plant’s competitive reach overlaps with the reach of another plant belonging to the merging partner, thus identifying the overlap customers. For each identified overlap customer area, the HMT is implemented using the critical loss analysis following a SSNIP by the hypothetical monopolist. We explain how to calculate the critical loss as well as the likely actual loss from the SSNIP.

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