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
Date Written: August 19, 2020
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: Suggested Citation