Coca-Cola and China’s Huiyuan Juice Group Ltd $2.4 billion deal looks like it is set to be the first major merger test for the China’s new AML. This WSJ story gives some sense of market shares and potential market definition issues…

Read the full piece here.

Abstract

When the winner of one auction gains a cost advantage in the next, bids reflect not only the value of winning the auction, but also the value of gaining an incumbent advantage in future auctions. If a larger firm’s advantage derives from a cost or product advantage, it has a greater chance of holding onto incumbency status which, in turn, increases the value it places on gaining incumbency. As a consequence, larger firms bid more aggressively than their smaller rivals, where “size” is measured by the probability of winning. In this environment, mergers eliminate competition among the merged firms but they also change bidding behavior by both merging and non-merging firms. Computational experiments suggest that the scope for pro-competitive mergers is much wider than in auctions without an incumbent advantage. In particular, mergers among smaller firms are likely to be pro-competitive because they tend to create better losers, i.e., firms who bid more aggressively but still lose a large part of the time.

Luke Froeb, Mikhael Shor and Steven Tschantz have just posted an interesting looking model of mergers in auction settings where the incumbent firm has an advantage in subsequent auctions. The model captures the intuition that sometimes a mergers creating a “second-best” rival can result in more more aggressive bidding and result in lower prices even if the merger does not create efficiencies.

Read the full piece here.

Steve Hurwitz as a characteristically thoughtful and provocative post over at Austrian Economists on identifying the most dangerous fallacies of fact and theory in economics that a reasonably informed layperson would believe. Steve’s nominations are that the average person believes that the “economic well-being of the average American is on the decline” (fallacy of fact) and (for the fallacy of theory) “that consumption (rather than savings/investment) is the key to economic growth.” The comments are definitely worth a read if you find the topic interesting and include lots of good nominations.

Read the full piece here.

An article in today’s WSJ, Price-Fixing Makes Comeback After Supreme Court Ruling, reports that minimum resale price maintenance (i.e., the setting of minimum retail prices by product manufacturers) is increasing in light of last summer’s Leegin decision. That’s great news for me, because I’ve spent most of the summer cranking out an article on how exactly such price-fixing should be evaluated now that the Dr. Miles rule of per se legality is dead.

Read the full piece here.

As the start of the new academic year inches closer, and students are deciding what courses to take, I thought I’d give a little plug to antitrust law. I’ve seen enrollment in antitrust courses vary dramatically over the past 10 years or so since I was a student and now as a professor. I certainly know the case against taking antitrust: “its not a bar course,” “you have to know a bunch of economics, right?”, and “its really difficult.”  But I hear this question from students frequently and I thought I’d share my typical answer to the titular question here…

Read the full piece here. 

In response to my post about the optimal institutional design for merger enforcement and the problems associated with dual federal enforcement, a reader points me to this related paper by Jon Klick, Francesco Parisi, and Norbert Schulz in the International Review of Law and Economics which models alternatives for allocating decision-making across multiple agencies. One of the fundamental insights is that fragmented regulatory authority can result in actions that produce various sorts of externalities in regulatory competition. For example, in concurrent regulation, one might think of the first agency’s decision to approve a merger as increasing the size of the rents that can be extracted by the second actor. This might be a good model of the sizeable extraction achieved by the FCC in the satellite radio merger.

Read the full piece here. 

Financial Times (HT: Danny Sokol) highlights the problem of multi-jurisdictional antitrust enforcement, emphasizing the rise of India and China.  The article repeats the basic point, worth repeating, that international cooperation can help avoid bad outcomes with multiple regulatory stakeholders with different incentives and institutional environments…

Read the full piece here. 

Over at Overcoming Bias, they are asking the following question:

Given how little it seems to cost to have someone killed, why don’t more corporations have their competitors’ leaders knocked off?

There are interesting answers in the comments suggesting that perhaps these killings or rival firms’ leaders are more common or more costly than commonly thought. Here’s a different question that only an antitrust junkie would ask: Would such a corporate assassination give rise to an antitrust violation?

Read the full piece here.