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Choosing Among Tools for Assessing Unilateral Merger Effects

28 Pages Posted: 6 Apr 2011 Last revised: 20 Nov 2012

Gregory J. Werden

U.S. Department of Justice - Antitrust Division

Luke Froeb

Vanderbilt University - Strategy and Business Economics

Date Written: March 1, 2011

Abstract

A raft of articles offered contrasting views on analytic tools for assessing unilateral effects from differentiated products mergers. We revisit this debate to clarify the issues and place them in context. We consider the choice among analytic tools at three stages of a merger assessment - initial screening, ultimate decision, and courtroom presentation. In doing so, we explain how the proper analytic tool for a particular merger depends on the competitive process in which the merging firms are engaged and how the merger is apt to affect it. We also explain how the proper analytical tool for a particular merger depends on the information currently available. We address the Upward Pricing Pressure Index (UPPI), finding merit in the idea of a simple screen for differentiated products mergers, and suggesting a slightly simpler calculation. We conclude that either as a screen or as part of a full assessment of a merger, other tools are preferable to the UPPI.

Keywords: unilateral effects, mergers, UPP, merger simulation

JEL Classification: L11, L41, K21

Suggested Citation

Werden, Gregory J. and Froeb, Luke, Choosing Among Tools for Assessing Unilateral Merger Effects (March 1, 2011). Vanderbilt Law and Economics Research Paper No. 11-19. Available at SSRN: https://ssrn.com/abstract=1804243 or http://dx.doi.org/10.2139/ssrn.1804243

Gregory Werden (Contact Author)

U.S. Department of Justice - Antitrust Division ( email )

450 Fifth Street, NW
9th Floor
Washington, DC 20530
United States
202-307-6366 (Phone)

Luke Froeb

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-9057 (Phone)
615-343-7177 (Fax)

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