Market Power and Antitrust Law Enforcement : Does the Local Presence of Antitrust Forces Matter?

We analyze the consequences of shuttering four Antitrust Division field offices by the U.S. Department of Justice in 2013 on corporate market power. Contrary to most criticism, we find little evidence that the closure of field offices cripples local antitrust law enforcement. We document that firms in the affected areas lost some market power. The decrease of market power is mainly driven by firms in the top quartile of the markups distribution. More intense market competition within the areas previously supervised by the closed field offices is a channel leading to the decrease of market power. Our work provides novel empirical evidence on the effectiveness of the hub-and-spoke regulation in the context of antitrust enforcement