Antitrust Enforcement and the Design of Disclosure Rules. An Application to Merger Control

This article investigates how antitrust agencies should structure the disclosing of information about efficiency gains from interested parties (merging firms, and competitors) in merger control. We analyze the particular case of a horizontal merger with danger of foreclosure, where welfare can decrease either due to insufficient efficiency gains (efficiency defense) or due to excessive efficiency gains if the competitor exits (effi- ciency offense). The first result is that evidence from competitors is not required unless the ex-ante market shares of the merging firms exceed a threshold. Second, we support the role of advocacy of the parties. The burden of proof for efficiency defense should rest in the insiders (merg- ing firms) whereas the burden of proof for efficiency offense should rest in outsiders (competitors). Finally, it is optimal to make insiders report first and outsiders second and any communication among parties has to be prohibited