Wednesday, December 5, 2007
Posted by D. Daniel Sokol
This is a great question and the differences tend to be small, at least according to a recent paper by Malcolm Coate and Shawn Ulrick of the FTC titled Do Court Decisions Drive the Federal Trade Commission Enforcement Policy on Merger Settlements?.
ABSTRACT: Most mergers filed at the enforcement agencies are conglomerate in nature with only minor horizontal overlaps. An enforcement agency may challenge any overlap believed to be adversely affected by the transaction. While the merging firm is entitled to a hearing in federal court, the delay would impose additional costs. Therefore, if the overlap of concern is small relative to the deal, the agency can in effect hold the bulk of the transaction, pending resolution. Hence, the agency's actions are not fully checked by the threat of litigation. This paper measures the extent to which the FTC's decisions to challenge conglomerate transactions differ from the courts'. We find that the representative enforcement regimes are remarkably similar. To the extent that differences exist, we find that the FTC appears more aggressive than the courts for unilateral effects, when (1) the market definition is clear and (2) the market is not highly concentrated.