Some comments to improve the draft merger guidelines

September 19, 2023
publication paper

In this paper, my comments mainly focus on improving the DMGs on their own terms. I suggest deleting one Guideline (Guideline 8) and substantially revising two others (Guidelines 6 and 7).  The comments involve the structure and general approach of the DMGs, while others apply to analysis in the specific guidelines. Some are expository suggestions intended to make the points clearer to readers. Others are suggestions to add analysis that has been omitted. Some others involve proposals for significant revisions. Some of the proposed revisions suggest a more interventionist approach while others suggest less.

There are numerous useful advances in the DMGs. For example, I share the concern that competitive harms suffered by workers and other input suppliers have been given short shrift in merger enforcement. Acquisitions of potential entrants and nascent competitors also raise serious concerns. The 2020 Vertical Merger Guidelines needed to be revised and the approach of making it clear that foreclosure concerns can also arise in horizontal, complementary product and conglomerate merger transactions is a helpful addition. Given the importance of multi-sided platforms, and the complexities and confusion they engender, it is useful to include them explicitly. I also support the inclusion of regulatory evasion and the concerns raised by Commissioner Rosch in his Ovation concurrence. Explaining why certain evidentiary burdens should be shifted to the parties and explaining that skepticism towards certain rebuttal claims is also a good idea.

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Supplemental comments for improving Guideline 6

My previous comments included a suggestion to revise the Agencies’ required structural evidence for satisfying their prima facie burden in the case of input foreclosure concerns under Guideline 6 with two evidentiary prongs. This supplemental comment suggests refining and improving the structural requirement by adding a third evidentiary prong that is based on analysis set out in Serge Moresi & Steven C. Salop, When Vertical is Horizontal: How Vertical Mergers Lead to Increases in “Effective Concentration, 59 REV. IND. ORG. 177 (2021).

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Revising Guideline 6 with evidence to establish a structural inference for input foreclosure

Vertical merger law lacks the structural presumption of horizontal merger law, which shifts the burden from the government to the merging parties to provide evidence that a merger will not produce anticompetitive effects when it is known that the merger will substantially increase market concentration. To improve Guideline 6 of the draft Merger Guidelines concerning vertical foreclosure, Steven Salop develops a three-factor criteria with which the government antitrust agencies can show an analogous structural “inference” that shifts the burden of evidence to the merging parties.

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