An Effective and Enforceable Alternative to the Consumer Surplus Standard
37 Pages Posted: 23 Jan 2003
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An Effective and Enforceable Alternative to the Consumer Surplus Standard
Abstract
We argue that sound merger policy requires an effective and enforceable efficiency defence standard. An effective standard yields decisions that serve the social objectives of competition policy. This requires minimization of the expected social cost of making Type I and II errors. An enforceable standard yields decisions at reasonable cost to the antitrust authorities and the merging firms. Support exists for alternatives to the current situation including the Consumer Surplus Standard described in Hillsdown. This standard does not meet our criteria for sound merger policy. We propose amending Section 92 and deleting Section 96 of the Competition Act, an approach that would yield a provision satisfying our criteria.
Keywords: Merger Policy, Efficiency Defence, Welfare Economics
JEL Classification: L4, D61, D63
Suggested Citation: Suggested Citation