Modifying Merger Consent Decrees to Improve Merger Enforcement Policy
7 Pages Posted: 22 Apr 2016 Last revised: 27 Jan 2018
Date Written: April 20, 2016
This article analyzes my short proposal for reviewing and modifying merger consent decrees to permit additional relief if the provisions of the initial consent merger are found to fail to preserve or restore competition in a reasonable period of time after the merger was consummated. My proposal also would involve more frequent reviews of consummated mergers that have been cleared without challenge, particularly those that were close calls. While “Don't Look Back” might be the best anthem for artists, economic decision theory would not support that approach to merger policy.
Predicting the impact of proposed mergers and remedies on consumers is difficult. As a result, remedies sometimes turn out to be insufficient to protect consumers and competition. This review and modification process would help to correct insufficient, poorly designed, or otherwise ineffective consent decrees. It will place more of the risk of failure on the merging parties who claim to the agency that the merger would not harm competition and that the remedy is sufficient to cure the agency's concerns. As a result, the merging firms likely would be incentivized to provide more efficient and effective remedies at the HSR stage, rather than bear the risk of less efficient remedies, disgorgement and other relief later. This allocation of risk to the merged firm also would help to deter the post-merger exercise of market power achieved or enhanced by the merger. For the same reasons, it also would increase the deterrence of anticompetitive mergers. Finally, it also could reduce the moral hazard of overreaching argumentation by the merging parties and their attorneys.
Keywords: Antitrust, Mergers, Remedy
JEL Classification: K21, K22
Suggested Citation: Suggested Citation