Pauline Affeldty, Tomaso Dusoz and Florian Szücs on ‘25 Years of European Merger Control’ (2019) DIW Berlin Discussion Paper 179

The first European merger control regime came into force in 1990. Since then, merger control has evolved significantly. This paper, available here, employs a new dataset, comprising all merger cases until 2014 that led to a decision by DG Comp (more than 5,000 individual decisions). The goal of the paper is to evaluate the time dynamics of the European Commission’s decision procedures. Specifically, the paper assesses how consistently different arguments related to so-called structural market parameters – market shares, concentration, likelihood of entry and foreclosure – were deployed by the Commission over time. The paper first estimates the probability of intervention as a function of merger characteristics. It finds that the existence of barriers to entry, increases in concentration and, in particular, the share of product markets with competitive concerns are positively associated with intervention by the Commission. After the reform of 2004, an effects-based approach centred on a clearly stated theory of harm became a cornerstone of EU merger…

Volker Nocke and Michael D. Whinston on ‘Concentration Screens for Horizontal Mergers’ (2020) NBER Working Papers no 27533

Concentration measures play a central role in merger analysis. Existing guidelines identify various presumptions – both safe harbours and presumptions of anticompetitive effects – based on the level of the post-merger Herfindahl index and of the change that the merger induces in that index. These presumptions have a significant impact on agency decisions, especially in screening mergers for further review. However, the basis for these screens, in both form and level, remains unclear. The authors of this paper, available here, show that there is both a theoretical and an empirical basis for focusing solely on changes in the Herfindahl index, and ignoring its level, in screening mergers for whether their unilateral effects will harm consumers. The authors also argue that the levels at which the presumptions currently are set may allow mergers to proceed that cause consumer harm. Section 2 reviews concentration screens in various versions of the US Horizontal Merger Guidelines. The first version of the Merger Guidelines –…

William E. Kovacic, Robert C. Marshall and Michael J. Meurer on ‘Serial collusion by multi-product firms’ (2018) Journal of Antitrust Enforcement 6 96

This paper, available here, is long and so, I am afraid, is the review. In short, the authors of this paper take issue with the assumption that each cartel in which a given firm participates is a single instance of conduct that is independent of other cartel conduct by the firm. Evidence of serial collusion by major multi-product firms is readily observable from the public record in a number of sectors, such as chemicals, electronics, car-parts, financial products or graphite. Further, collusion persists in at least three of these industries, with new investigations having recently been opened into collusion in the chemical, auto parts, and financial products markets. The paper provides empirical evidence that many multi-product firms have each participated in several cartels over the past 50 years. It argues that traditional assumptions regarding how cartelists operate, and consequent enforcement strategies, are deficient in many aspects. Reflecting this, the authors make policy recommendations to reign in serial collusion. The article is structured as…

UK Furman Report – Unlocking digital competition, Report of the Digital Competition Expert Panel,

This Report, which can be found here, follows a review ordered by the UK’s Treasury to make recommendations on changes to competition and pro-competition policy to help unlock the opportunities of the digital economy. The report’s recommendations build on a number of propositions, namely that: the digital economy is creating substantial benefits; that a number of digital markets are prone to tipping and being ‘winner-takes-all’; market concentration in these markets both creates benefits and incurs costs; but government policy and regulation have limitations. In the light of this, the report found that the standard tools of competition policy, evaluating whether mergers can proceed and whether antitrust action is warranted to remedy abuses by companies, could play a role in helping to promote competition and the associated better outcomes for consumers and innovation. To do so, competition policy will need to be updated to address the novel challenges posed by the digital economy. Some of these updates can happen within current powers,…

Carl Shapiro and Herbert Hovenkamp ‘Horizontal Mergers, Market Structure, and Burdens of Proof’ (2018) Yale Law Journal 127(7) 1996

This paper, which can be found here, deals with the ‘structural presumption’ for merger control set out in US law by the Philadelphia National Bank case in 1963. In this case, the Supreme Court stated: “That ‘competition is likely to be greatest when there are many sellers, none of which has any significant market share,’ is common ground among most economists, and was undoubtedly a premise of congressional reasoning about the antimerger statute.’ The Supreme Court held that a merger producing a firm that controls an “undue percentage share” of the market and that “results in a significant increase in the concentration of firms in that market” is “inherently likely to lessen competition substantially.” As a result, the merger should be prohibited, at least “in the absence of evidence clearly showing that the merger is not likely to have such anticompetitive effects” The merging parties can then rebut this structural presumption by showing that the market shares do not accurately…