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"Evolution of the Merger Guidelines: Is This Fox Too Clever by Half?"
The 2023 Merger Guidelines make some notable improvements over the 2010 Horizontal Merger Guidelines. They give greater emphasis to the idea that predicting the competitive effects of a proposed merger is inherently difficult and that to block a merger the government need only show that the merger may substantially lessen competition, not that it will do so. They also give greater emphasis to dynamic competition and innovation, especially regarding acquisitions of potential entrants, and they add useful material on multi-sided platforms. However, the treatment of market definition in the 2023 Merger Guidelines is likely to weaken horizontal merger enforcement by demoting the role of the hypothetical monopolist test, which is used to define markets for the purpose of measuring market shares, and by removing extensive material from prior guidelines which explained why market shares measured in narrower markets tend to be more informative than market shares measured in broader markets. The 2023 Merger Guidelines lower the market concentration thresholds that trigger a presumption by the antitrust enforcement agencies that a merger may substantially lessen competition, but the enforcement data suggest that change will have little effect in practice. The 2023 Merger Guidelines also are likely to lead to less effective deterrence of harmful mergers because they are not well targeted at the mergers most likely to substantially lessen competition.
Carl Shapiro is a Distinguished Professor of the Graduate School at the University of California at Berkeley. Shapiro has published extensively in the areas of industrial organization, competition policy, patents, the economics of innovation, and competitive strategy. Shapiro had the honor of serving as a Member of the President’s Council of Economic Advisers during 2011-12. He was the Deputy Assistant Attorney General for Economics at the Antitrust Division of the U.S. Department of Justice during 2009-2011, a position he also held during 1995-96. Shapiro also has testified as an expert witness on behalf of the government in a number of high-profile antitrust cases. His publications and curriculum vitae can be found at https://faculty.haas.berkeley.edu/shapiro/.
Please contact Nina Bell at nbell@ucdavis.edu.