Coordinated Effects

Abstract

The analysis of potential coordinated effects of mergers has moved from an unvarnished reliance on the “structural” presumption that simply a reduction in the number of competitors may likely facilitate collusion to a more sophisticated assessment of the likelihood that a transaction will facilitate or enhance coordination and harm consumers. While the reduction in the number of firms and the resulting increase in concentration is at best a starting point for such assessment, other considerations play an equal or possibly even more important role in merger assessment now. The 1992 Merger Guidelines now ask whether the relevant market is plausibly conducive to coordination, and then whether the transaction will change market conditions in a way that relaxes the constraints on market participants in a way that would make coordination more likely, stable, or complete. Reviews of coordinated effects of several recent mergers by U.S. and European regulatory agencies illustrate this approach and its focus on potential mechanisms of coordination, the impact of the merger on such mechanisms, and the importance of pricing complexity when assessing coordinated effects.

Keywords: coordinated effects, merger, antitrust, competition