Antitrust Law Daily Wrap Up, ANTITRUST NEWS: “Prediction in antitrust is hard,” Commissioner Wright professes, (Nov 17, 2014)

By Greg Hammond, J.D.

Predictive fact-finding in antitrust matters—such as merger analysis—is difficult, FTC Commissioner Joshua D. Wright revealed at the Washington Bar Association’s 31st Annual Antitrust, Consumer Protection, and Unfair Business Practices Seminar in Seattle, November 13, 2014. In his presentation, entitled “Prediction in Antitrust is Hard (But Some Predictions are Harder than Others)”, Commissioner Wright noted that the FTC has demonstrated appropriate skepticism in most cases, but has potentially deviated in its handling of Nielsen Holdings N.V.’s $1.26 billion acquisition of Arbitron Inc.

In 2013, The FTC filed antitrust claims against Nielsen, a media research company, based on its proposed acquisition of Arbitron—a company that sold audience measurement services. According to the Commission, the acquisition would substantially lessen competition and create a monopoly in the market for national syndicated cross-platform audience measurement services—a market that did not yet exist. A consent order was subsequently entered, and Wright issued a dissenting statement, noting that there was insufficient evidence that Nielsen’s acquisition would substantially lessen competition in the identified future market.

According to Wright, Nielsen represented an “unbelievably hard” case for predictive fact finding in a merger setting, as neither of the merging parties was in the market of national syndicated cross-platform audience measurement devices; neither company was committed to entering that market in the near future; and the market did not exist.

In analyzing this type of merger, Wright asks the question: “What set of economic analyses and other types of evidence should be required to justify a finding that a merger between two firms is likely to substantially lessen competition in a market which does not now exist and may never exist?” The answer, according to Wright, is that “such a finding is beyond the limits of what we can or should expect from antitrust analysis given current tools.”

Consequently, Wright disagrees with the Commission’s decision to approve the Nielsen consent order, because the decision was made without knowing: (1) whether both Nielsen and Arbitron could and would individually establish a cross-platform product absent the merger; (2) the ultimate attributes of any such product and whether they would be substitutable by consumers; or (3) how the market would evolve, what other competitors might exist, and whether they might impose competitive restraints.

“Developing better, empirically-grounded, and user-friendly economic tools for understanding entry and other supply-side activity [is] a challenge for economists and [a] potential focus for 2028 Horizontal Merger Guidelines,” Wright suggested.

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