Innovations in the 2010 Merger Guideline: Theoretical Foundations, Legal Overview, and Impact of the Changes on Merger Analyses

53 Pages Posted: 25 Mar 2022 Last revised: 27 Sep 2022

Date Written: September 26, 2022

Abstract

The 2010 revision of the Merger Guidelines highlighted the importance of both economic modeling of the post-merger competitive process and effects evidence, defined as information able to predict the transaction’s likely competitive effect. With sufficient data, it is possible to see how actual merger analyses are using this information. Two samples are studied. For 16 recent merger litigations (all enjoined), economic price modeling was credited as relevant in eight court decisions. Focusing on a sample of 126 Federal Trade Commission (FTC) investigations of specific competitive concerns, sophisticated economic modeling was observed in 13, simpler modeling, such as the Upward Pricing Pressure, was applied in 11 for a total of 24 investigations with economic modeling Moreover, diversion statistics were estimated in 18 in an attempt to measure closeness of competition. In addition to the economic modeling, the court analyses recognized effects evidence (natural experiments, hot documents or customer complaints) in seven of the 16 mergers reviewed and the FTC staff files reported comparable evidence in 74 of the 95 reviewed markets that resulted in a merger challenge. Interestingly, economic price modeling is represented at a much higher rate in the court cases, than in the FTC investigations.

Keywords: Simulation modeling, Upward Pricing Pressure, effects evidence, mergers, competition policy

JEL Classification: K21, K41, L40, M38

Suggested Citation

Coate, Malcolm B., Innovations in the 2010 Merger Guideline: Theoretical Foundations, Legal Overview, and Impact of the Changes on Merger Analyses (September 26, 2022). Available at SSRN: https://ssrn.com/abstract=3988160 or http://dx.doi.org/10.2139/ssrn.3988160

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