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The Antitrust Division of the Department of Justice and the Federal Trade Commission have commenced a process of reviewing the Merger Guidelines that were last subject of a comprehensive revision in 1993. The agencies are holding a series of workshops and have solicited comments on a number of questions that they have formulated. The questions and the workshops, however, fail to take account of a major development in the assessment of mergers: their impact on the buying side of the market. Empirical data show that buying side effects can be quite substantial; yet the Guidelines devote only two sentences to discussing the analysis of this topic. These comments present a review of the central issues that ought to be included in comprehensive merger guidelines concerning buyer power: appropriate definition of the buying side product and geographic dimensions of the relevant markets, the likely competitive effects including the potential for such effects in various levels of market concentration, and the resulting thresholds above which more serious evaluation of mergers creating increased buyer power ought to be investigated. The basic point of these comments is that the revised Merger Guidelines should directly and clearly address the issue of buyer power resulting from mergers and provide appropriate standards for the evaluation of such effects.
Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.
These recommendations and comments respond to the request by the Federal Trade Commission and the Department of Justice's Antitrust Division for public comment on the draft 2020 Vertical Merger Guidelines. We commend the agencies for updating the 1984 non-horizontal merger guidelines by recognizing the substantial advances in economic thinking about vertical mergers in the thirty-five years since those guidelines were issued. Our comments emphasize four issues: (i) the treatment of the elimination of double marginalization (“EDM”), particularly that the draft vertical merger guidelines appear inappropriately to make proof of cognizability part of the agencies burden and that they appear to inappropriately treat the merging firm's failure to have eliminated double marginalization pre-merger as proof that the merger would lead to EDM and that the post-merger EDM would be merger-specific; (ii) the seemingly arbitrary and inappropriately permissive safe harbor; (iii) the inappropriate (though perhaps unintended) apparent requirement that harms be quantified; and (iv) the inappropriate (though perhaps unintended) apparent requirement that the agencies show that foreclosure would not have been profitable before the merger. We are concerned that these features of the draft Guidelines will lead to under-enforcement and false negatives (including under-deterrence).