The Dirty Little Secret About Litigated Mergers

Today, legislators and economists are actively debating the government’s role in reviewing mergers. However, this debate is largely driven by a misleading narrative that the courts, through judicial precedent, have made it almost impossible for government agencies to block problematic mergers.

Earlier this month, Carl Shapiro and Howard Shelanski, two respected progressive-leaning economists, released a study about the Judicial Reponses to the 2010 Horizontal Merger Guidelines. The study unearthed some stubborn facts that clearly support the view that antitrust laws governing mergers work and work reasonably well.

Shapiro and Shelanski examined horizontal mergers that were challenged by the antitrust agencies and litigated before the courts during two time periods, from 2000-2010 and from 2010-2020. The reason for looking at these two decades comparatively is that antitrust agencies updated their thinking in the 2010 Horizontal Mergers Guidelines. It’s worth noting that both authors played a significant role in revamping these guidelines during their time at the agencies and make the case in support of how the guidelines have shaped merger review.

Table 1 in the study unearths the dirty little secret about litigated mergers. In short, the government’s ability to block a merger is anything but inept.

screen_shot_2021-02-22_at_1.05.38_pm.png

Here are three ways this study undermines calls to significantly change our merger laws:

Taken together the government’s successful record of blocking mergers makes it hard to credibility support changes to the statutory legal standard by which mergers are reviewed or to consider shifting the burden away from the government to the merging parties. The overwhelming majority of mergers are pro-competitive, that is not debatable. For the handful of transactions that raise concerns, the government possess a solid legal framework and influence over the way courts think about economics. The one thing it arguably needs is more resources to enforce the law.

Additional reading:

About the authors

Sean Heather

Sean Heather is Senior Vice President for International Regulatory Affairs and Antitrust.

Read more