Alive and Kicking: Collusion Theories in Merger Analysis at the Federal Trade Commission
44 Pages Posted: 15 Nov 2007 Last revised: 25 Jan 2008
Date Written: January 1, 2008
This paper explores the use of collusion theories in merger analysis at the Federal Trade Commission. The 1992 Merger Guidelines focuses on unilateral effect, relegating collusion analysis to a second tier theory. Both structural and behavioral conditions conducive to establishing or maintaining an arrangement to restrict competition are listed in the Guidelines. This paper undertakes a systematic review of 75 merger decisions filed between 1993 and 2005 to identify the conditions that are found to increase the likelihood of a collusion finding. Standard structural concerns are readily identified, while behavioral factors defy characterization. Instead, the analysis seems to develop a Folk Theorem in which structural concerns are validated with some type of performance evidence. Further work finds allegations of maverick conduct add little to the analysis, while the Bush administration appears slightly more likely to identify a collusion problem than the Clinton regulators.
Keywords: merger, oligopoly, coordinated interaction, Federal Trade Commission, merger guidelines, maverick
JEL Classification: K21, L13, L40
Suggested Citation: Suggested Citation