Merger guidelines

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Competition law

Basic concepts
History of competition law Monopolization Coercive monopoly Natural monopoly Barriers to entry Market power SSNIP test Relevant market Merger control
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Collusion Formation of cartels Price fixing Product bundling and tying Refusal to deal Group boycott Exclusive dealing Bid rigging Dividing territories Conscious parallelism Predatory pricing Misuse of patents and copyrights
Laws and doctrines
United States Sherman Antitrust Act Clayton Antitrust Act Robinson-Patman Act Federal Trade Commission Act Merger guidelines Essential facilities doctrine Noerr-Pennington doctrine Rule of reason Europe European Community competition law Irish Competition Law Competition Act 1998 (U.K.) Australia Trade Practices Act 1974
Enforcement authorities and organizations
International Competition Network List of competition regulators
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The Merger guidelines are a set of internal rules promulgated by the Antitrust Division of the United States Department of Justice (USDOJ) in conjunction with the Federal Trade Commission (FTC). These rules, which have been revised a number of times in the past four decades, govern the extent to which these two regulatory bodies will scrutinize and/or challenge a potential merger on grounds of market concentration or threat to competition within a relevant market.

The merger guidelines have sections governing both horizontal integration and vertical integration.

1 History of the Merger guidelines
2 Notes
3 See also
4 External links

[edit] History of the Merger guidelines

The first merger guidelines set forth by the USDOJ were the 1968 Merger Guidelines,^[1] which remained largely unchanged until 1982. The 1968 guidelines were developed by former U.S. Assistant Attorney General Dr. Donald Turner, an economist and lawyer with expertise in the field of industrial organization.^[2] These merger guidelines were criticized in some quarters as being overly concerned with issues of market structure such as barriers to entry and concentration ratios at the expense of efficiency and economies of scale.^[3] They were, however, a step forward in two ways: they gave more accurate advice to corporate management as to when and how mergers would be examined, and brought new economic ideas into antitrust enforcement, specifically the "structure-conduct-performance" model of industrial organization.^[2]

In 1982, Associate Attorney General Bill Baxter, under the authority of U.S. Attorney General William French Smith, released a new set of guidelines, which made heavier use of modern concepts of microeconomic theory, including the using the Herfindahl index to determine market concentration.^[4] The newer guidelines took a more favorable view of economies of scale and efficiency of production as rationales for integration.^[2] Moreover, they raised the level of market concentration necessary for the government to scrutinize mergers, effectively treating competition as a means to greater efficiency rather than as a goal in and of itself.^[5] This was quite a controversial approach at the time: some antitrust lawyers saw it as a loosening of previous restraints on corporate consolidation, and some State Attorneys General responded to Baxter's changes by tightening merger enforcement at the state level.^[3]

The guidelines were revised again in 1984.^[6] The only remaining portion of the 1984 guidelines which remains in effect is Section Four, which governs the examination of market effects of vertical integration. These guidelines were later replaced by the 1992 Merger Guidelines,^[7] which represented a fine-tuning of previously established tools and policies, such as the SSNIP test and rules governing the acquisition of failing firms. The most recent revision of the merger guidelines was made in 1997,^[8] which are still effective as of 2007.