Another Way to Skin the Cat? Perspectives on Using Section 2 to Challenge the Acquisition of Nascent Competitors

XXI The Threshold 1 (Fall 2020)

16 Pages Posted: 3 Sep 2020 Last revised: 21 Oct 2020

See all articles by Timothy Snyder

Timothy Snyder

Yale University - Law School

James Moore

Axinn Veltrop & Harkrider, LLP

Date Written: August 5, 2020

Abstract

In the last year, various leaders at the Federal Trade Commission and the Antitrust Division of the Department of Justice have held out Section 2 of the Sherman Act as a vehicle for targeting acquisitions involving nascent competitors—including consummated mergers—that raise potential antitrust concerns. Three propositions, in particular, have invited controversy:

(1) claims under Section 2 challenging the acquisition of a nascent competitor by a monopolist (or would-be monopolist) present a lower bar than Section 7 with respect to proving competitive effects and causation;

(2) evidence of intent may be used as a proxy for probable harm; and

(3) Section 2 may aid enforcers in challenging serial acquisitions—of targets with low market shares or start-ups outside of the acquirer’s primary market—on a course-of-conduct or “monopoly broth” theory.

These three points merit careful discussion. In May 2020, the American Bar Association Section of Antitrust Law (“ABA”) hosted an important panel, entitled A Lesser Hurdle? Exploring Section 2 as Applied to Consummated Mergers, to discuss competing views on this topic. In a similar spirit, this paper summarizes the key arguments on the topic to date, drawing on both the ABA panel discussion and recent scholarship. Rather than attempt to resolve the debate here, we capture the key points on both sides of each controversy to serve as a departure point for future discussion.

Keywords: Acquisition, Nascent Competition, Section 2 of the Sherman Act, Serial Acquisitions

JEL Classification: L, K

Suggested Citation

Snyder, Timothy and Moore, James, Another Way to Skin the Cat? Perspectives on Using Section 2 to Challenge the Acquisition of Nascent Competitors (August 5, 2020). XXI The Threshold 1 (Fall 2020), Available at SSRN: https://ssrn.com/abstract=3668026 or http://dx.doi.org/10.2139/ssrn.3668026

Timothy Snyder (Contact Author)

Yale University - Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States

James Moore

Axinn Veltrop & Harkrider, LLP ( email )

950 F Street, N.W.
Washington, DC
United States
202-469-3512 (Phone)

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