Antitrust Law Daily Wrap Up, ANTITRUST NEWS: AAI urges increased merger enforcement in 2016 Presidential Transition Report, (Mar 29, 2016)

By Linda O’Brien, J.D., LL.M.

The American Antitrust Institute (AAI) has released the merger chapter of its Transition Report on Competition Policy to the 45th President of the United States, encouraging the next president to step up enforcement of the Horizontal Merger Guidelines and to prepare to litigate merger cases.

The release of the chapter, entitled “Mergers, Market Power, and the Need for More Vigorous Enforcement,” is the first in a series of previews in which the AAI will make select chapters of the transition report available for download in advance of the November election. The AAI Presidential Transition Report makes policy recommendations based on the AAI's mission of promoting competition that protects consumers, businesses, and society.

The AAI’s merger chapter looks at the current merger control practice by the two antitrust agencies—Federal Trade Commission and Department of Justice, Antitrust Division— and offers a variety of recommendations.

The evidence indicates that, over a period of time, merger enforcement has declined as the agencies and courts have relaxed the presumption that mergers in highly concentrated industries are anticompetitive and moved towards a case-by-case economic analysis, according to the AAI. These changes have allowed an increasing number of mergers in major industries and concern over concentration and pricing power.

The chapter recommends that the agencies must aggressively and consistently enforce the Horizontal Merger Guidelines. They are designed to prevent mergers that are likely to enhance market power and lead to anticompetitive effects. The Guidelines also state current economic understanding and good policy, so adherence to them will provide clarity and consistency to merger review policy. The agencies should conduct a detailed study of past mergers to determine the extent to which mergers resulted in efficiencies, what types of efficiencies, and of what magnitude.

Additionally, it is recommended that the agencies prepare to litigate cases that would “more firmly establish the structural presumption, signal renewed attention to mergers in moderately concentrated markets, and secure structural relief as opposed to conduct remedies wherever possible.” The two agencies are also urged to “issue new or updated merger commentaries that explain their legal and economic treatment of potential competition cases, mergers involving network effects and two-sided markets, and vertical mergers or mergers that create or enhance the opportunity for merging parties to exercise market power through exclusionary practices, foreclosure of rivals, and the evasion of regulation.”

“The goal of the 2016 AAI Transition Report is to assist the next president’s transition team by providing a comprehensive examination of current, pressing issues facing antitrust enforcement and policy,” said AAI's President Diana Moss. “The report is also a public resource for those who have an interest and stake in these important issues."

News: AcquisitionsMergers Antitrust