Merger Guidelines Reading
Volume 16, Issue 4 of the George Mason Law Review (which I received in my mailbox today) has a well timed issue from its antitrust symposium featuring several articles on revisions to the Merger Guidelines. Especially recommended is DOJ economist Greg Werden’s article here, which usefully sets the stage for some of the important debates. Here is a key excerpt from Werden’s analysis, which I think can fairly be interpreted as coming out “against” revision:
The Horizontal Merger Guidelines usefully describe the agencies’ analysis without acting as a straightjacket. They allow the agencies to refine their analysis on a continuous basis and apply the best available tools. And they allow the agencies to take the enforcement action warranted by the available evidence. Changes in the intensity of enforcement are possible without changes in either the analytical framework or basic policies set out in the Guidelines. Because of the flexibility carefully designed into the Horizontal Merger Guidelines, only the efficiencies section was found in need of revision during the Clinton administration.
I believe that the business community and merger practitioners understand
current enforcement policy on horizontal mergers quite well. This is true with respect to general policies and also with respect to fine points on market delineation, competitive effects analysis, and evaluation of efficiencies claims. Therefore, I perceive no significant uncertainty that should be addressed through revising the Horizontal Merger Guidelines.
Moreover, experience suggests that a thorough revision of the Guidelines would take up to three years and occupy some of the agencies’ best people for a total of more than two thousand hours.39 Consequently, all new heads of the federal enforcement agencies would be well-advised to announce plans to issue revised guidelines only after both identifying the uncertainty to be addressed and formulating a plan to address it. Taking this cautious approach may lead to a determination that there is no significant problem or a determination that there is no satisfactory solution.
The Agencies’ press release is suggestive of a “workshop first” and consideration of “possible” revision later approach consistent with what Werden advocates in the last paragraph — though FTC Chairman Leibowitz’s statement (“The 1992 Guidelines explicitly stated that they would be revised from time to time… . We think the time has come to do that”) is a bit stronger about the likelihood of revision. Despite the prefatory language about possible revision, I’d set the probability at P=.90.