The 2023 Draft Merger Guidelines: A Review

47 Pages Posted: 4 Oct 2023 Last revised: 26 Oct 2023

See all articles by Herbert Hovenkamp

Herbert Hovenkamp

University of Pennsylvania Carey Law School; University of Pennsylvania - The Wharton School

Date Written: September 10, 2023

Abstract

The 2023 draft Merger Guidelines shift the focus of enforcement away from price results and toward increasing concentration. While they seek to use “simple and straightforward” language to reach a broad audience, they are not sufficiently sensitive to that audience’s principal concern, which is high prices. The current draft relies heavily on Supreme Court case law from the 1960s and 1970s at the expense of more recent cases in the Circuit Courts of Appeal relating merger law to antirust’s general concern about higher prices and the exercise of market power. In some cases, the draft Guidelines may even disapprove mergers that reduce prices, in conflict with Supreme Court precedent.

In other ways, the draft Guidelines usefully expand enforcement, particularly against horizontal mergers further facilitating interfirm coordination or harmful unilateral effects. The Guidelines would have a greater chance of managing their way through the federal courts if they focused on this core, where the 2010 Guidelines were underdeterrent. An abundance of economic data indicates that the basic law of horizontal mergers is underenforced, and is not offering sufficient protection against merger-induced price increases. That message must be brought home to the federal judges seeking to line up these Guidelines with the statutory language and case law.

The draft’s increased focus on supply markets, particularly labor, is well justified, but it does not adequately link the health of product markets to that of labor markets. Labor is mainly a variable cost, highly and quickly responsive to changes in product output. So a wage-enhancing policy for labor is well facilitated by a policy advocating high output and low prices for buyers.

In several collateral areas the draft Guidelines widely voice new concerns that have not been well developed in previous Guidelines. In others, however, they exhume obsolete doctrines that are difficult to defend, particularly if their application is not related to the attainment of higher output and lower prices.

Keywords: Antitrust, Mergers, Merger Guidelines, Economics of Mergers, Antitrust Agency Enforcement

Suggested Citation

Hovenkamp, Herbert, The 2023 Draft Merger Guidelines: A Review (September 10, 2023). U of Penn, Inst for Law & Econ Research Paper No. 23-37, Available at SSRN: https://ssrn.com/abstract=4566082 or http://dx.doi.org/10.2139/ssrn.4566082

Herbert Hovenkamp (Contact Author)

University of Pennsylvania Carey Law School ( email )

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Philadelphia, PA 19104
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319-512-9579 (Phone)

University of Pennsylvania - The Wharton School ( email )

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Philadelphia, PA 19104-6365
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