Sunday, December 16, 2007
Posted by D. Daniel Sokol
Malcolm Coate of the FTC's Bureau of economics has written an important paper that tracks and analyzes all review of 75 merger decisions filed between 1993 and 2005 to identify the conditions that are found to increase the likelihood of a collusion finding is his paper Alive and Kicking: Collusion Theories in Merger Analysis at the Federal Trade Commission.
ABSTRACT: This paper explores the use of collusion theories in merger analysis at the Federal Trade Commission. The 1992 Merger Guidelines focuses on unilateral effect, relegating collusion analysis to a second tier theory. Both structural and behavioral conditions conducive to establishing or maintaining an arrangement to restrict competition are listed in the Guidelines. This paper undertakes a systematic review of 75 merger decisions filed between 1993 and 2005 to identify the conditions that are found to increase the likelihood of a collusion finding. Standard structural concerns are readily identified, while behavioral factors defy characterization. Instead, the analysis seems to develop a Folk Theorem in which structural concerns are validated with some type of performance evidence. Further work finds allegations of maverick conduct add little to the analysis, while the Bush administration appears slightly more likely to identify a collusion problem than the Clinton regulators.