Is Concentration Actually Increasing, or are We Just Defining Markets More Narrowly?
CPI North America Column 2022
5 Pages Posted: 1 Feb 2023
Date Written: June 1, 2022
Abstract
In a recent notice requesting public comment on potential changes to the Merger Guidelines, DOJ and FTC leaders assert that mergers have caused markets to become more concentrated and less competitive. To remedy this perceived problem, the Agencies requested comment on “whether concentration thresholds should be adjusted to improve the efficiency and effectiveness of enforcement” and “[h]ow should the guidelines analyze whether there is a ‘trend toward concentration in the industry,’ and what impact should such a trend have on the analysis of an individual transaction?” However, recent empirical research undercuts the basic premise underlying these inquiries, demonstrating (i) there is scant evidence of a broad increase in market concentration, and (ii) to the extent some nonetheless perceive such a trend, it may be explained by the trend toward defining narrower markets that have fewer competitors and higher market shares.
Keywords: Antitrust, FTC, DOJ, Merger Guidelines, concentration, market definition
JEL Classification: K21, L40
Suggested Citation: Suggested Citation