What Structural Presumption? Reuniting Evidence and Economics on the Role of Market Concentration in Horizontal Merger Analysis

Posted by Social Science Research Network

What Structural Presumption? Reuniting Evidence and Economics on the Role of Market Concentration in Horizontal Merger Analysis Sean Patrick Sullivan (Federal Trade Commission)

Abstract: In horizontal merger analysis, the “structural presumption” is a proposition standing for the typical illegality of mergers combining rival firms with large shares of the same relevant market. Courts and commentators are rarely precise in their use of the word “presumption,” however, and discussion of the structural presumption suffers from foundational uncertainty about what kind of presumption the proposition actually entails. The potential choices are as follows: it could be (1) a presumption in the sense of a substantive factual inference based on economic theory, or (2) a presumption in the sense of a procedural device for artificially shifting the burden of production at trial. This paper argues that the substantive factual inference approach is the better reading of caselaw and the sounder application of the laws of antitrust and evidence. By instead treating the structural presumption as a burden-shifting legal presumption, modern merger analysis needlessly complicates the use of market concentration evidence and systematically undervalues the actual probative weight of this evidence. In this context, a formal legal presumption confers weaker evidentiary weight than a simple substantive inference.