Should Unions Play a Role in Merger Review?

Abstract

Agencies currently evaluate mergers by conducting a truncated cost-benefit analysis in which the impacts of a proposed merger on various markets must be estimated. Many critics question this method, which requires data that are not always available and assumptions that are not always reliable. An alternative approach would be to conduct merger review as a “structured bargain” among affected parties or their representatives, on the model of corporate bankruptcy. For example, where merging firms are unionized, the unions could be given the right to block a merger that harms their members. Appointed representatives or the agencies themselves could be given the responsibility to represent the interests of consumers and other groups. This paper evaluates versions of this approach and explores reform.

Keywords: unions, mergers

JEL Classification: J5, K21