Does Merger Enforcement Depend on the Portion of the Merger Associated with the Competitive Concerns?
Posted by Social Science Research Network
Malcolm B. Coate & Shawn W. Ulrick (US Federal Trade Commission)
Abstract: Most mergers involve multiple markets. The potential for settlement can vary by the fraction of the overall deal attributable to the markets of concern. (i.e., by the “overlap”). If an antitrust agency challenges a merger having only a small overlap, negotiating a settlement is very likely; but if the entire transaction is at issue, a challenge decision often leads to litigation. Regulators, antitrust attorneys, and expert economists have long wondered if the degree of overlap influences upon the agency’s challenge decision, because settlement and litigation impose disparate costs (including litigation risks and time-delays) on the agency and firms. Given over 20 years of experience with modern merger analysis, it is possible to address this question with several empirical models: (1) a two-stage estimation of the settle-challenge process, (2) decomposition analyses focused on matters exhibiting either high or low overlaps, and (3) statistical matching analyses. These models predict differences of 13 to 19 percentage points between the challenge probabilities of mergers exhibiting high and low overlaps. The difference suggests the potential for over- or under-enforcement. Comparing the FTC policy to that of the court quantifies this potential. The exact magnitude depends on the assumptions used to interpret the evidence. One set of assumptions suggests less enforcement when the overlap is high, while another set of assumptions predicts more enforcement when the overlap is low.
Featured News
Judge Mehta Questions Both Sides in Landmark Google Antitrust Case
May 2, 2024 by
CPI
FCC Urges Urgent Funding for Removal of Chinese Telecom Equipment from U.S. Networks
May 2, 2024 by
CPI
Former Pioneer CEO Facing Potential Criminal Charges For Colluding With OPEC
May 2, 2024 by
CPI
South Korea’s Antitrust Regulator Greenlights K-Pop Powerhouse Deal
May 2, 2024 by
CPI
Exxon’s Pioneer Purchase Approved, Former CEO Barred from Board
May 2, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI