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Mergers That Harm Sellers

30 Pages Posted: 10 Feb 2018  

C. Scott Hemphill

New York University School of Law

Nancy L. Rose

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 30, 2018

Abstract

This article examines the antitrust treatment of mergers that harm sellers. We separately consider two mechanisms of harm, increased classical monopsony power and increased bargaining leverage. We show that lost upstream competition is a cognizable harm to the competitive process. Our central claim is that harm to sellers in an input market is sufficient to support antitrust liability. We defend this conclusion against the contrary view that demonstrated harm to the merging firms’ downstream purchasers or final consumers is an essential element of any antitrust claim. We further argue that claimed “efficiencies” premised on a reduction in buy-side competition are not efficiencies at all.

Keywords: antitrust, bargaining leverage, mergers, monopsony

JEL Classification: C78, I11, J42, K21, L13, L41

Suggested Citation

Hemphill, C. Scott and Rose, Nancy L., Mergers That Harm Sellers (January 30, 2018). Yale Law Journal, 2018, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3113679

C. Scott Hemphill (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Nancy L. Rose

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-280B
Cambridge, MA 02142
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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