Potential Competition and the 2023 Merger Guidelines

Review of Industrial Organization, Forthcoming

35 Pages Posted: 7 Mar 2024 Last revised: 16 Apr 2024

See all articles by Richard Gilbert

Richard Gilbert

University of California, Berkeley

A. Douglas Melamed

Stanford Law School

Date Written: April 11, 2024


The 2023 Merger Guidelines devote a section to mergers that eliminate potential competition. This is an important contribution because agency guidelines have not discussed the subject in detail for almost 50 years. The new Guidelines follow the traditional distinction that has been upheld in the courts between a merger’s effects on incumbent responses to perceived potential competition and the potential effects of actual entry. Antitrust enforcement should assess both possible aspects of potential competition in an integrated fashion because harm from a merger occurs not infrequently from the elimination of actual potential competition; and when the elimination of perceived potential competition has an effect, it often occurs along with and as a consequence of the elimination of actual potential competition. Economic studies suggest that the benefits of perceived potential competition are less than some courts have assumed and that the benefits of actual potential competition are greater. Rather than focusing solely on the probability of harm from the elimination of a potential entrant, antitrust enforcement should adopt a sliding scale that takes into account the magnitude of the benefits for consumers or suppliers if entry is successful. Mergers with potential and nascent competitors can be harmful even if the probability of actual entry absent the merger is small.

Keywords: Antitrust, competition, mergers, perceived potential competition, actual potential competition

JEL Classification: K21, L12, L13, L41, L44

Suggested Citation

Gilbert, Richard and Melamed, Doug, Potential Competition and the 2023 Merger Guidelines (April 11, 2024). Review of Industrial Organization, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4721456 or http://dx.doi.org/10.2139/ssrn.4721456

Richard Gilbert (Contact Author)

University of California, Berkeley ( email )

Department of Economics
530 Evans Hall #3880
Berkeley, CA 94720
United States
510 339 6493 (Phone)

Doug Melamed

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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