Download this Paper Open PDF in Browser

The Predictive Power of Merger Analysis

Antitrust Bulletin, Vol. 56, No. 3, p. 543, 2011

Seattle University School of Law Research Paper No. 12-2

41 Pages Posted: 25 Jan 2012 Last revised: 31 Jan 2012

John B. Kirkwood

Seattle University School of Law

Date Written: Fall 2011

Abstract

This article looks first at the process courts use to resolve merger challenges and finds that in the area of product market definition, merger analysis is reasonably strong. Market definition remains complex and subjective, however, and could be improved, or avoided altogether, through econometric techniques such as merger simulation. Judicial analysis of entry is much weaker. Courts ask whether the market is protected by entry barriers but rarely ask whether the barriers are high enough to make entry unprofitable.

The article also examines the results of “marginal” mergers, mergers that would have been blocked if the government and courts had been somewhat more aggressive. Measured in this way, merger analysis is not seriously off target: the merger retrospectives find that very few transactions led to sharp price changes. They also find, however, that a large proportion of marginal mergers resulted in small price increases, which suggests that in appropriate cases, enforcement agencies and courts should be more willing to predict anticompetitive effects.

Keywords: mergers, prediction, market definition, entry, simulation, retrospectives, behavioral economics

Suggested Citation

Kirkwood, John B., The Predictive Power of Merger Analysis (Fall 2011). Antitrust Bulletin, Vol. 56, No. 3, p. 543, 2011; Seattle University School of Law Research Paper No. 12-2. Available at SSRN: https://ssrn.com/abstract=1717945

John Kirkwood (Contact Author)

Seattle University School of Law ( email )

901 12th Avenue, Sullivan Hall
P.O. Box 222000
Seattle, WA n/a 98122-1090
United States

Paper statistics

Downloads
165
Rank
154,398
Abstract Views
1,337