Mergers as Monopolization

We tend to think of mergers and monopolization as separate and distinct branches of antitrust. Using Section 2 to attack mergers raises the question of whether merger enforcement has been ineffective. But there is another explanation. The legal and economic frameworks are most developed when it comes to strategic horizontal mergers, and correspondingly less developed when it comes to mergers involving nascent competitors. Merger analysis under Hart-Scott-Rodino is a predictive exercise. The “actual potential competition” doctrine, with its stringent causation requirement, adds an additional layer of predictive difficulty. The FTC’s losses in Steris/Synergy and Meta/Within are illustrative. By contrast, Section 2 of the Sherman Act gives the agencies the ability to look back at completed mergers, including those of nascent competitors. Although Section 2 requires a showing of monopoly power, its causation requirement is easier to meet than that of the actual potential competition doctrine. Hence it is understandable that both DOJ and FTC are using Section 2 to attack mergers that appear to have been anticompetitive and cemented dominance. The forthcoming revisions to the merger guidelines hopefully will address some of these issues.

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