Merger Policy at the Federal Trade Commission : What, If Anything, Has Changed?

The modern Merger Guidelines have controlled merger enforcement decisions for the last thirty years. Economic theory has evolved (and continues to evolve) and revisions of the Guidelines have integrated some of these thoughts into the merger review methodology. This paper tabulates and evaluates information from Federal Trade Commission (FTC) merger analyses using data for 1989 to 2014. The FTC’s workload focuses on horizontal mergers, with particular interest in health care, consumer goods, and a specific group of intermediary product industries. The evidence suggests that a shift away from coordinated interaction (collusion) cases occurred after the introduction of the 1992 Merger Guidelines, with a further shift focused on differentiated products after the 2010 revision in the Guidelines. Abstracting from a large number of mergers to monopoly studied, the structural characteristics of investigations reviewed with unilateral effects or collusion theories appear similar, but not identical. Most three-to-two and four-to-three mergers end up challenged, while other transactions often pass through the review process. Evidence suggests that the 2010 Merger Guidelines may have led to some convergence of staff analyses on entry and efficiency issues. Statistical analysis of the merger review process detects a little populism, but no evidence of partisan political influence on the enforcement decision. Merger challenge decisions appear fact driven, with the choice of theory not influencing the weights given to the specific structural factors. Weak evidence suggests the 2010 revisions might have had an effect on policy, but more information is needed before any strong conclusions can be drawn. Overall, it is the fact-based staff findings that appear to drive the merger review process