The Evolution of Judicial Standards: Evidence from Litigated Merger Trials

Abstract

A popular narrative suggests that, in the wake of the rise of the Chicago School, the judiciary has grown increasingly lax, making it increasingly difficult for antitrust agencies to successfully challenge mergers in court. We develop a theoretical framework that examines the impact of changing judicial standards on merger challenges, settlements, and court outcomes. We then undertake an empirical investigation using the population of all mergers, challenges, and litigated outcomes in the U.S. between 1979 and 2021 to test for the presence of shifting judicial standards. We find that, contrary to the popular narrative, judicial standards have shifted in favor of the antitrust agencies during the past four decades.

Keywords: Antitrust, Mergers, Judicial Standards

JEL Classification: L4, K21