Monopsony and Labor Markets in Merger Review : Global Antitrust Institute Comment of the DOJ-FTC Request for Information on Merger Enforcement

The Global Antitrust Institute (“GAI”) respectfully submits this Comment to the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) in connection with their Request for Information on Merger Enforcement (“Merger RFI”) This comment addresses the questions contained in Section 9 of the RFI related to Monopsony Power and Labor Markets. Our view is that protecting workers, input suppliers, and consumers from the effects of monopsony should be an important goal of antitrust. The effects of classical monopsony result in harm to workers, other input suppliers, and consumers by simultaneously reducing output, decreasing workers’ wages, and increasing prices for consumers. Under the consumer welfare standard, preventing mergers that would likely create the harms generated by the exercise of classical monopsony power should be an important goal of both antitrust law and merger policy.Based on the existing evidence, an empirically supported basis for the use of differential analyses for labor or for presumptions in labor markets does not clearly exist at this time. Merger enforcement should continue to use careful fact-based economic analysis to guide both enforcement and policy directed at mergers that create market power in input markets. These include the use of merger retrospectives of consummated transactions to identify transactions and underlying conditions where the anticompetitive exercise of market power in labor and other input markets is likely. We also suggest that the DOJ and FTC focus scarce enforcement resources on cases in which a merger generates market power that leads to the effects of classical monopsony, that is, transactions that restrict market output and negatively affect allocative efficiency, and where structural remedies focused on the monopoly in the output market would not alleviate the monopsony/buyer side effects