Non Incumbent Competition: Mergers Involving Constraining and Prospective Competitors

INTRODUCTION

Over the past thirty years, merger analysis by the Federal Trade Commission ("FTC") and the Antitrust Division of the Justice Department ("DOJ") has been significantly improved by several developments. More sophisticated use of concentration-share thresholds, the theory of unilateral effects, more explicit standards for evaluating entry, and the treatment of efficiencies, among other changes, have made successive versions of the Merger Guidelines a better reflection of underlying economics, a more precise enforcement tool, and more helpful to businesses and to the courts. With respect at least to one important area of concern, however, current analysis of mergers has not only failed to advance but, indeed, has regressed. That area is commonly known, but not well described, by the term "potential competition." The classic form of a merger involving a "potential competitor" concerns an incumbent Firm A that merges with or acquires Firm B...

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