1993 Horizontal Merger Guidelines

The Antitrust Division of the Department of Justice and the Federal Trade Commission have commenced a process of reviewing the Merger Guidelines that were last subject of a comprehensive revision in 1993. The agencies are holding a series of workshops and have solicited comments on a number of questions that they have formulated. The questions and the workshops, however, fail to take account of a major development in the assessment of mergers: their impact on the buying side of the market. Empirical data show that buying side effects can be quite substantial; yet the Guidelines devote only two sentences to discussing the analysis of this topic. These comments present a review of the central issues that ought to be included in comprehensive merger guidelines concerning buyer power: appropriate definition of the buying side product and geographic dimensions of the relevant markets, the likely competitive effects including the potential for such effects in various levels of market concentration, and the resulting thresholds above which more serious evaluation of mergers creating increased buyer power ought to be investigated. The basic point of these comments is that the revised Merger Guidelines should directly and clearly address the issue of buyer power resulting from mergers and provide appropriate standards for the evaluation of such effects.

These Guidelines outline the principal analytical techniques, practices, and the enforcement policy of the Department of Justice and the Federal Trade Commission (the "Agencies") with respect to mergers and acquisitions involving actual or potential competitors ("horizontal mergers") under the federal antitrust laws. The relevant statutory provisions include Section 7 of the Clayton Act, 15 U.S.C. § 18, Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45. Most particularly, Section 7 of the Clayton Act prohibits mergers if "in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly." The Agencies seek to identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that are either competitively beneficial or neutral. Most merger analysis is necessarily predictive, requiring an assessment of what will likely happen if a merger proceeds as compared to what will likely happen if it does not. Given this inherent need for prediction, these Guidelines reflect the congressional intent that merger enforcement should interdict competitive problems in their incipiency and that certainty about anticompetitive effect is seldom possible and not required for a merger to be illegal.

Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.