Innovations in the 2010 Merger Guideline : Theoretical Foundations, Legal Overview, and Impact of the Changes on Merger Analyses

The 2010 revision of the Merger Guidelines highlighted the importance of both economic modeling of the post-merger competitive process and effects evidence, defined as information able to predict the transaction’s likely competitive effect. With sufficient data, it is possible to see how actual merger analyses are using this information. Two samples are studied. For 16 recent merger litigations (all enjoined), sophisticated economic modeling is credited as relevant in eight court decisions. Focusing on a sample of 126 Federal Trade Commission (FTC) investigations of specific competitive concerns, sophisticated economic modeling was observed in 13, simpler modeling, such as the Upward Pricing Pressure, was applied in 11, and diversion statistics were estimated in 18. In addition to modeling, the court analyses recognized effects evidence in seven of the 16 mergers reviewed and the FTC staff files reported comparable evidence in 74 of the 95 reviewed markets that resulted in a merger challenge. Interestingly, formal economic modeling is represented at a much higher rate in the court cases, than in the FTC investigations