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Reinvigorating Horizontal Merger Enforcement

48 Pages Posted: 7 Jun 2007 Last revised: 30 Oct 2007

Jonathan B. Baker

American University - Washington College of Law

Carl Shapiro

University of California, Berkeley - Haas School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: October 2007

Abstract

The past forty years have witnessed a remarkable transformation in horizontal merger enforcement in the United States. With no change in the underlying statute, the Clayton Act, the weight given to market concentration by the federal courts and by the federal antitrust agencies has declined dramatically. Instead, increasing weight has been given to three arguments often made by merging firms in their defense: entry, expansion and efficiencies. We document this shift and provide examples where courts have approved highly concentrating mergers based on limited evidence of entry and expansion. We show using merger enforcement data and a survey we conducted of merger practitioners that the decline in antitrust enforcement is ongoing, especially at the current Justice Department. We then argue in favor of reinvigorating horizontal merger enforcement by partially restoring the structural presumption and by requiring strong evidence to overcome the government's prima facie case. We propose several routes by which the government can establish its prima facie case, distinguishing between cases involving coordinated vs. unilateral anti-competitive effects.

Keywords: horizontal mergers, merger enforcement, antitrust, coordinated effects, unilateral effects

JEL Classification: K22, K49, L41, L42

Suggested Citation

Baker, Jonathan B. and Shapiro, Carl, Reinvigorating Horizontal Merger Enforcement (October 2007). Available at SSRN: https://ssrn.com/abstract=991588 or http://dx.doi.org/10.2139/ssrn.991588

Jonathan B. Baker (Contact Author)

American University - Washington College of Law ( email )

4300 Nebraska Avenue, NW
Washington, DC 20016
United States
202-274-4315 (Phone)

Carl Shapiro

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States
510-642-5905 (Phone)

HOME PAGE: http://faculty.haas.berkeley.edu

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