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Analyzing Vertical Mergers
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Book Synopsis Analyzing Vertical Mergers by : Hans Zenger
Download or read book Analyzing Vertical Mergers written by Hans Zenger and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following AT&T/Time Warner and the recent adoption of U.S. Vertical Merger Guidelines, vertical merger policy has again become a subject of intense debate. Some commentators have argued that vertical merger enforcement is too lax and should be invigorated, in particular in the U.S. Others see a greater risk of false positives and argue that the standard for intervention should remain high in such cases. Against this background, this article discusses the economics of assessing vertical mergers with a particular emphasis on recent European case practice.
Book Synopsis Analyzing Vertical Mergers by : Roger D. Blair
Download or read book Analyzing Vertical Mergers written by Roger D. Blair and published by . This book was released on 2020 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the adoption of the 2020 Vertical Merger Guidelines, the U.S. antitrust agencies have updated their guidance on vertical mergers for the Twenty-First Century. Although economists have long recognized the procompetitive benefits most vertical mergers generate, the law has not always followed suit, and has sometimes condemned vertical mergers for making the merged firm more efficient. In this article, we attempt to catalogue the extensive list of efficiencies that vertical mergers can generate, trace the often halting efforts to incorporate these insights into the law, and propose a framework that courts and agencies can use to assess the likely competitive effects of vertical transactions. We draw heavily upon leading cases, particularly Baker Hughes and AT&T, with two refinements. First, consistent with the final Guidelines (but not the earlier draft) and the economic literature noting a symmetry between unilateral anticompetitive effects (raising rivals' costs) and procompetitive effects (the elimination of double marginalization), which we call the “unilateral effects tradeoff,” we argue a plaintiff alleging a raising rivals cost (RRC) theory of harm must also address EDM as part of its prima facie case. Second, if the plaintiff carries its prima facie burden, then the defendant should be able to argue, and courts and Agencies should seriously consider, the full range of procompetitive efficiencies, which we call a “holistic efficiency analysis.”
Book Synopsis Analyzing Vertical Mergers to Avoid False Negatives by : Steven C. Salop
Download or read book Analyzing Vertical Mergers to Avoid False Negatives written by Steven C. Salop and published by . This book was released on 2019 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article analyzes three recent vertical mergers: a private antitrust case attacking the consummated merger of Jeld-Wen and Craftmaster Manufacturing Inc. (“CMI”) that was cleared by the DOJ in 2012 but subsequently litigated and won by the plaintiff, Steves & Sons in 2018; and two recent vertical merger matters investigated and cleared (with limited remedies) by 3-2 votes by the Federal Trade Commission in early 2019 -- Staples/Essendant and Fresenius/NxStage. There are some factual parallels among these three matters that make it interesting to analyze them together. First, the DOJ's decision to clear Jeld-Wen/CMI merger appears to be a clear false negative, and the two dissenting Commissioner suggest that the recent FTC decisions similarly are false negatives. Second, the DOJ and possibly the FTC in Staples/Essendant may have overlooked the “Frankenstein Monster” scenario of input foreclosure. Third, both the DOJ and the FTC in Fresenius/NxStage also apparently relied on the absence of complaints in making their clearance decisions. The analysis of these mergers also suggests several policy implications involving the need to analyze the full range of anticompetitive concerns, the potential for merger retrospectives by independent (as opposed to staff) researchers, the height of the evidentiary burden on the agencies to show competitive harm in light of their limited budgets, and the need for greater transparency in Commission statements, as well as the potential errors in relying on a lack of complaints.
Book Synopsis Potential Competitive Effects of Vertical Mergers by : Steven C. Salop
Download or read book Potential Competitive Effects of Vertical Mergers written by Steven C. Salop and published by . This book was released on 2015 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this short article is to aid practitioners in analyzing the competitive effects of vertical and complementary product mergers. It is also intended to assist the agencies if and when they undertake revision of the 1984 U.S. Vertical Merger Guidelines. Those Guidelines are out of date and do not reflect current enforcement or economic thinking about the potential competitive effects of vertical mergers. Nor do they provide the tools needed to carry out a modern competitive effects analysis. This article is intended to partially fill the gap by summarizing the various potential competitive harms and benefits that can occur in vertical mergers and the types of economic and factual analysis of competitive effects that can be applied to those mergers during the HSR review process. The analysis in the article also identifies several legal and policy issues that the agencies would consider when they undertake the process of revising the Vertical Merger Guidelines. The Appendix contains a listing and summary of the vertical merger cases challenged by the DOJ and FTC since 1994.
Book Synopsis Antitrust Analysis of Vertical Mergers by : Koren Wong-Ervin
Download or read book Antitrust Analysis of Vertical Mergers written by Koren Wong-Ervin and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The generally well-accepted belief motivating modern antitrust analysis of vertical mergers -- i.e., acquisitions that combine companies in different levels of the same supply chain -- is that they are generally procompetitive or neutral. That belief is based upon a significant body of empirical evidence. Indeed, as former U.S. Federal Trade Commission (FTC) Bureau of Economics head Francine Lafontaine and Margaret Slade concluded, “[c]onsistent with the large set of efficiency motives for vertical mergers . . . the [empirical] evidence on the consequences of vertical mergers suggests that consumers mostly benefit from mergers that firms undertake voluntarily.” That view of the empirical evidence is consistent with other meta-studies of the empirical evidence by leading industrial organization economists from academia and the U.S. antitrust agencies. Consistent with this evidence, the U.S. antitrust agencies typically have rarely challenged vertical mergers. When they have challenged vertical mergers, they have tended to resolve concerns with narrowly tailored behavioral remedies, such as firewalls to prevent the sharing of rivals' competitively sensitive information, non-discrimination clauses to eliminate incentives to disfavor rivals, and requirements to supply and/or license competitors. This Article is organized as follows: Section I sets forth the empirical evidence supporting the widespread understanding that vertical integration is generally procompetitive or neutral, and responds to the major critiques of these studies. Section I also discusses typical justifications for vertical integration, namely avoiding the costly and risky processes of forming, administering, and enforcing contracts with independent suppliers and customers. Section II lays out the economic approach to antitrust analysis of vertical mergers, briefly addressing calls for the U.S. antitrust agencies to update their 1984 Non-Horizontal Merger Guidelines. Section III discusses remedies. The final section offers closing thoughts focusing on the relative expertise of agencies and courts as compared to merging parties in evaluating the costs and benefits of vertical integration.
Book Synopsis Analyzing Vertical Mergers with Auctions Upstream by : Joseph U. Podwol
Download or read book Analyzing Vertical Mergers with Auctions Upstream written by Joseph U. Podwol and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We develop a model of vertical mergers with open auctions upstream, This setting may be appropriate for industries where inputs are procured via auction-like "requests for proposal." For example, Drennan et al (2020) reports that a model of this type was used during the CVS-Aetna merger investigation, Our approach contrasts with a growing body of work on vertical mergers where input prices are determined through Nash bargaining, We discuss how the vertical merger effects of raising rivals' costs and eliminating double markup might be quantified in our particular model.
Book Synopsis A Comparative Analysis by : Lezlie Gohrband
Download or read book A Comparative Analysis written by Lezlie Gohrband and published by . This book was released on 1982 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Monopolization Through Endogenous Vertical Mergers by : Gamal Atallah
Download or read book Monopolization Through Endogenous Vertical Mergers written by Gamal Atallah and published by . This book was released on 2016 with total page 6 pages. Available in PDF, EPUB and Kindle. Book excerpt: While endogenous merger analysis has been applied to horizontal mergers, the thrust of vertical merger analysis has been based on exogenous mergers. The goal of this paper is to analyze endogenous vertical mergers. I consider a market structure with a downstream monopolist and an oligopolistic upstream industry. The downstream monopolist chooses to buy a certain number of the upstream firms. Mergers are endogenous, in the sense that the bids made by the downstream firm must be accepted by each of the integrated upstream firms, and must not exceed the increase in the profits of the downstream firm. It is shown that the unique equilibrium is complete monopolization: the buyer buys all the firms in the upstream industry. This result is consistent with the result that vertical mergers are profitable. However, it is in contrast with horizontal endogenous mergers, where complete monopolization is generally not an equilibrium.
Book Synopsis Rivals' Exit and Vertical Merger Evaluation by : Javier D. Donna
Download or read book Rivals' Exit and Vertical Merger Evaluation written by Javier D. Donna and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We discuss a subset of vertical mergers, where the exercise of market power and the efficiencies enabled by a vertical merger reduce rivals' profits, making rivals' exit a potentially serious concern. Rivals' exit can fundamentally alter the welfare analysis of vertical mergers due to the reduction in product variety to consumers and the reduction in the number of competitors that would otherwise exert downward pricing pressure. An exit-inducing vertical merger might reduce welfare even if it is a welfare-enhancing merger absent exit. We present a theoretical framework to analyze vertical mergers that focuses on the possibility and consequences of exit, discuss the antitrust implications for merger evaluation, and provide examples. We argue that the possibility of rivals' exit should be an integral part of the analysis of vertical mergers.
Book Synopsis Five Principles for Vertical Merger Enforcement Policy by : Jonathan B. Baker
Download or read book Five Principles for Vertical Merger Enforcement Policy written by Jonathan B. Baker and published by . This book was released on 2020 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt: There seems to be consensus that the Department of Justice's 1984 Vertical Merger Guidelines do not reflect either modern theoretical and empirical economic analysis or current agency enforcement policy. Yet widely divergent views of preferred enforcement policies have been expressed among agency enforcers and commentators. Based on our review of the relevant economic literature and our experience analyzing vertical mergers, we recommend that the enforcement agencies adopt five principles: (i) The agencies should consider and investigate the full range of potential anticompetitive harms when evaluating vertical mergers; (ii) The agencies should decline to presume that vertical mergers benefit competition on balance in the oligopoly markets that typically prompt agency review, nor set a higher evidentiary standard based on such a presumption; (iii) The agencies should evaluate claimed efficiencies resulting from vertical mergers as carefully and critically as they evaluate claimed efficiencies resulting from horizontal mergers, and require the merging parties to show that the efficiencies are verifiable, merger-specific and sufficient to reverse the potential anticompetitive effects; (iv) The agencies should decline to adopt a safe harbor for vertical mergers, even if rebuttable, except perhaps when both firms compete in unconcentrated markets; (v) The agencies should consider adopting rebuttable anticompetitive presumptions that a vertical merger harms competition when certain factual predicates are satisfied. We do not intend these presumptions to describe all the ways by which vertical mergers can harm competition, so the agencies should continue to investigate vertical mergers that raise concerns about input and customer foreclosure, loss of a disruptive or maverick firm, evasion of rate regulation or other threats to competition, even if the specific factual predicates of the presumptions are not satisfied.
Book Synopsis U.S. Department of Justice Merger Guidelines by : United States. Department of Justice. Antitrust Division
Download or read book U.S. Department of Justice Merger Guidelines written by United States. Department of Justice. Antitrust Division and published by . This book was released on 1984 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Comcast/NBCU written by Jonathan B. Baker and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The FCC's analysis of the Comcast-NBCU transaction fills a gap in the contemporary treatment of vertical mergers by providing a roadmap for courts and litigants addressing the possibility of anticompetitive exclusion. The FCC identified the factors any judicial or administrative tribunal would likely consider today in analyzing whether a vertical merger would lead to anticompetitive input or customer foreclosure, and a range of economic methods potentially relevant to applying that template to the facts of a transaction. Notwithstanding the difference between administrative adjudication under a public interest standard and judicial decision-making under the Clayton Act, the legal framework and economic studies the Commission employed promise to influence the approach that antitrust tribunals will now take in evaluating vertical mergers.
Book Synopsis The Antitrust Paradox by : Robert Bork
Download or read book The Antitrust Paradox written by Robert Bork and published by . This book was released on 2021-02-22 with total page 536 pages. Available in PDF, EPUB and Kindle. Book excerpt: The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Book Synopsis Vertical Mergers and Integration in Digital Markets by : John M. Yun
Download or read book Vertical Mergers and Integration in Digital Markets written by John M. Yun and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this chapter, we address three issues relating to vertical mergers and antitrust: (1) incorporating the elimination of double marginalization into the analysis of the likelihood of a unilateral price effect rather than treating it as a separate efficiencies defense; (2) recognizing, inter alia, the importance of reduced transaction costs in analyzing the efficiencies commonly associated with vertical mergers; and (3) highlighting that the weight of the empirical evidence continues to support the proposition that vertical mergers are less likely to generate competitive concerns than horizontal mergers.
Book Synopsis The Economic Assessment of Mergers Under European Competition Law by : Daniel Gore
Download or read book The Economic Assessment of Mergers Under European Competition Law written by Daniel Gore and published by Cambridge University Press. This book was released on 2013-04-25 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Provides a clear, concise and practical overview of the key economic techniques and evidence employed in European merger control.
Book Synopsis Handbook of Antitrust Economics by : Paolo Buccirossi
Download or read book Handbook of Antitrust Economics written by Paolo Buccirossi and published by . This book was released on 2008-03-21 with total page 716 pages. Available in PDF, EPUB and Kindle. Book excerpt: Experts examine the application of economic theory to antitrust issues in both the United States and Europe, discussing mergers, agreements, abuses of dominance, and the impact of market features. Over the past twenty years, economic theory has begun to play a central role in antitrust matters. In earlier days, the application of antitrust rules was viewed almost entirely in formal terms; now it is widely accepted that the proper interpretation of these rules requires an understanding of how markets work and how firms can alter their efficient functioning. The Handbook of Antitrust Economics offers scholars, students, administrators, courts, companies, and lawyers the economist's view of the subject, describing the application of newly developed theoretical models and improved empirical methods to antitrust and competition law in both the United States and the European Union. (The book uses the U.S. term “antitrust law” and the European “competition law” interchangeably, emphasizing the commonalities between the two jurisdictions.) After a general discussion of the use of empirical methods in antitrust cases, the Handbook covers mergers, agreements, abuses of dominance (or unilateral conducts), and market features that affect the way firms compete. Chapters examine such topics as analyzing the competitive effects of both horizontal and vertical mergers, detecting and preventing cartels, theoretical and empirical analysis of vertical restraints, state aids, the relationship of competition law to the defense of intellectual property, and the application of antitrust law to “bidding markets,” network industries, and two-sided markets. Contributors Mark Armstrong, Jonathan B. Baker, Timothy F. Bresnahan, Paulo Buccirossi, Nicholas Economides, Hans W. Friederiszick, Luke M. Froeb, Richard J. Gilbert, Joseph E. Harrington, Jr., Paul Klemperer, Kai-Uwe Kuhn, Francine Lafontaine, Damien J. Neven, Patrick Rey, Michael H. Riordan, Jean-Charles Rochet, Lars-Hendrick Röller, Margaret Slade, Giancarlo Spagnolo, Jean Tirole, Thibaud Vergé, Vincent Verouden, John Vickers, Gregory J. Werden
Book Synopsis The Welfare Effects of Vertical Mergers and Their Remedies by : John W. Mayo
Download or read book The Welfare Effects of Vertical Mergers and Their Remedies written by John W. Mayo and published by . This book was released on 2020 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper extends Williamson's (1968) classic framework of the welfare effect of mergers to the case of vertical mergers, and in particular to those in which the imposition of merger conditions (remedies) may allow an otherwise anticompetitive merger to proceed. While similarities to the case of horizontal mergers without a remedies option are present, differences also arise. Most notably, for prototypical vertical mergers remedies may yield post-merger economic welfare which is higher than pre-merger levels. This suggests that remedies directed toward vertical mergers hold the promise of a more beneficial approach than in the case of horizontal mergers. This finding leads to an examination of merger remedies policy and practice. We find that antitrust enforcers historically have implicitly recognized both the economic welfare framework and the more robust role for remedies in vertical merger cases, particularly through the application of remedies aimed at preventing identified anticompetitive conduct while facilitating merger-related efficiencies. The 2020 Vertical Merger Guidelines illuminate the basis for the U.S. antitrust agencies' substantive analysis of vertical mergers, but do not address remedies. This paper discusses principles that may be useful in formulating much-needed guidance that would unify, clarify and reinforce the agencies' policies for remedies in vertical merger cases.
