Acquisitions of Potential Competitors: The U.S. Approach and Calls for Reform

Forthcoming, Competition Law and Policy Debate, Fall 2020 (WORKING DRAFT)

13 Pages Posted: 21 Aug 2020 Last revised: 3 Sep 2020

See all articles by Koren Wong-Ervin

Koren Wong-Ervin

Antitrust Partner at Axinn, Veltrop, & Harkrider LLP

James Moore

Axinn Veltrop & Harkrider, LLP

Date Written: August 19, 2020

Abstract

This Article begins with a discussion of the U.S. approach to analyzing acquisitions of potential competitors. We explain the need for exacting standards, including due to the increased difficulties of predicting the future world without the acquisition. Unlike with actual competition, with potential competition there is no history of competition with price and other historical data, which makes the counterfactual analysis all the more difficult. We then consider the evidence that existing laws have resulted in systematic underenforcement and substantial harm to competition, finding no reliable evidence to this effect. We conclude with a discussion of the risks posed by various reform proposals, including the potential for harm to competition and innovation. We also explain how the various proposals would introduce significant uncertainty in antitrust enforcement, which can serve as a tax on transactions.

Keywords: acquisitions, potential competition, Clayton Act Section 7, mergers, killer acquisitions

JEL Classification: K21, K2, L4, L40, L82

Suggested Citation

Wong-Ervin, Koren and Moore, James, Acquisitions of Potential Competitors: The U.S. Approach and Calls for Reform (August 19, 2020). Forthcoming, Competition Law and Policy Debate, Fall 2020 (WORKING DRAFT), Available at SSRN: https://ssrn.com/abstract=3677443 or http://dx.doi.org/10.2139/ssrn.3677443

Koren Wong-Ervin (Contact Author)

Antitrust Partner at Axinn, Veltrop, & Harkrider LLP ( email )

950 F Street, N.W.
Washington, DC
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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