Mergers that Harm Sellers

32 Pages Posted: 10 Feb 2018 Last revised: 15 Jun 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: March 9, 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 an actionable 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. Nor is it necessary for plaintiffs to demonstrate a reduction in the input quantity transacted. 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 (March 9, 2018). 127 Yale Law Journal 2078 (2018). 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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