Horizontal Mergers, Market Structure, and Burdens of Proof

30 Pages Posted: 2 Oct 2017 Last revised: 29 May 2018

See all articles by Herbert Hovenkamp

Herbert Hovenkamp

University of Pennsylvania Carey Law School; University of Pennsylvania - The Wharton School; University College London

Carl Shapiro

University of California, Berkeley - Haas School of Business

Date Written: 2018


Since the Supreme Court’s landmark 1963 decision in Philadelphia National Bank, antitrust challengers have mounted prima facie cases against horizontal mergers that rested on the level and increase in market concentration caused by the merger, with proponents of the merger then permitted to rebut by providing evidence that the merger will not have the feared anticompetitive effects. Although the way that concentration is measured and the triggering levels have changed over the last half century, the basic approach has remained intact. This longstanding structural presumption, which is well supported by economic theory and evidence, has been critical to effective merger enforcement. We suggest some ways to strengthen it further.

One critical assumption in this burden shifting framework is that the goal of merger policy is to protect consumers against high prices or reduced output, product variety, product quality, or innovation (“consumer welfare”). If the goal is something else, such as deterring industrial concentration to control corporate political power, or protecting small firms from larger competitors, then the structural presumption must be viewed differently. The bulk of this essay examines and defends the role of structural presumptions in the present legal world where protection of consumer welfare is the point of merger enforcement. We also briefly consider a legislative proposal that could be seen as departing from this norm, offering some guidance concerning how this proposal could be improved so as to strengthen merger enforcement, in part by making it easier for the government to establish its prima facie case.

Keywords: mergers, antitrust, structuralism, consumer welfare, prices, output, competition

JEL Classification: D43, K21, L41

Suggested Citation

Hovenkamp, Herbert and Shapiro, Carl, Horizontal Mergers, Market Structure, and Burdens of Proof (2018). Yale Law Journal, Vol. 127, p. 1996, 2018, U of Penn, Inst for Law & Econ Research Paper No. 17-42, Available at SSRN: https://ssrn.com/abstract=3046224 or http://dx.doi.org/10.2139/ssrn.3046224

Herbert Hovenkamp (Contact Author)

University of Pennsylvania Carey Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
319-512-9579 (Phone)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

Carl Shapiro

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-5905 (Phone)

HOME PAGE: http://faculty.haas.berkeley.edu

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics