POTENTIAL COMPETITION: A FORCE AWAKENED OR A PHANTOM MENACE?

Abstract

The 2023 Merger Guidelines promulgated by the Department of Justice and the Federal Trade Commission resurrects the Potential Competition Doctrine. The doctrine, developed and expanded by the Supreme Court, was severely restricted and nearly killed by Justice Powell in U.S. v. Marine Bancorp. The potential competition doctrine is actually two separate doctrines, actual potential competition doctrine and perceived potential competition doctrine. The 1984 Merger Guidelines combined the separate doctrines. The 1992 Horizontal Merger Guidelines moved away from them, seeking to consider firms at the fringe of a market as entrants, in the market, or out of the market. And finally, the 2010 Horizontal Merger Guidelines further marginalized the doctrine, perhaps more severely than even Marine Bancorp. We argue that the 2023 Merger Guidelines takes back much of the ground given up in prior versions of the Guidelines, reinstating potential competition doctrine to its former glory — as well as adding a sister concept of nascent competition — while still being mindful of the limitations inherent in Marine Bancorp. The FTC challenge against Meta’s acquisition of Within suggest that while bringing back the theory for the dead is one thing, winning a case might be another thing entirely.

Keywords: antitrust, competition policy, industrial organization, mergers

JEL Classification: L00, L2, L22