Reevaluating Merger Guidelines for the New Economy
KDI School of Public Policy and Management
KDI School of Pub Policy & Management Paper No. 06-18
The inherent dynamic competitiveness of the new economy brings about novel challenges to antitrust enforcements. We evaluate the appropriateness of the 1992 Horizontal Merger Guidelines in light of this new environment. We show that the Guidelines relies too heavily on market concentration measures that are bound to be overstated for new-economy industries. To properly address the dynamic competitiveness of the market, we suggest that the Guidelines should (i) explicitly consider innovation markets in the market-defining process, (ii) pay attention to entry conditions as the most important standard for assessing competitiveness, (iii) examine demand-side volatilities when assessing likeliness of entries, and (iv) use less strict standards for substantiating efficiency gains.
Number of Pages in PDF File: 29
Keywords: horizontal merger, antitrust, new economy
JEL Classification: K21
Date posted: February 1, 2007
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