Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC Commissioner Wright urges less reliance on structural presumptions in merger analysis, (Sep 26, 2013)
By Jeffrey May, J.D.
With two cases in litigation and a number of consent orders recently announced, it is a busy time at the Commission in the merger enforcement area. Against this backdrop, FTC Commissioner Joshua D. Wright has suggested some changes in the way the agency analyzes mergers and acquisitions.
In remarks today, before the Fordham Competition Law Institute’s 40th annual international antitrust law and policy conference, Wright urged antitrust enforcers to rely less on structural presumptions in analyzing mergers to better reflect modern economic thinking and empirical evidence. Wright made the same suggestion in a speech at the 2013 Georgetown Global Antitrust Symposium Dinner just two days earlier.
Under the structural presumption, which was first announced by the Supreme Court in Philadelphia National Bank, a merger that results in undue market share is presumed likely to lessen competition. As a result, the transaction must be enjoined unless the merging parties offer evidence clearly showing that the merger is not likely to have such anticompetitive effects. Although the influence of the structural presumption has eroded somewhat, it continues to play a significant role in merger analysis in the federal courts, according to Wright.
Wright called on the FTC to shift towards an evidence-based competitive effects analysis. This would be an important step of updating current merger doctrine, according to the commissioner.
At the FTC, there may be reluctance to let go of the Philadelphia National Bank presumption, Wright noted. It is a strong litigation tool to shift the burden to the merging parties. However, the FTC has an obligation to do the rigorous economic analysis in challenging a merger, in Wright’s view.
Efficiencies. Wright also expressed his belief that the Commission, in conducting merger reviews, should consider out-of-market efficiencies—competitive benefits from a merger that are outside the relevant product market. With the trend toward narrow market definitions, the exclusion of these efficiencies could lead to a blocked merger despite the overall consumer benefits of the deal, he noted.
Retrospectives. In closing, Wright suggested that the FTC continue its work conducting retrospectives. This follows a recent call from FTC Chairwoman Edith Ramirez for “targeted, well-designed retrospectives [that] can play an important role in guiding agency enforcement priorities and decisions.” Wright said that possible areas of focus for these retrospectives might include studies of entry, vertical mergers, and physician acquisitions, which are likely to become more common in the future.
News: Antitrust FederalTradeCommissionNews