Friday, November 7, 2008
Posted by D. Daniel Sokol
ABSTRACT: This chapter provides an overview of the economics of conglomerate mergers, with a focus on the potential for an increase in its product portfolio to lead to conduct that is anticompetitive. The economics of portfolio power indicates that a conglomerate merger that results in a firm posttransaction having a larger portfolio or product range may have the ability and incentive to engage in anticompetitive conduct. The key question for enforcement is how and whether to identify transactions that might give rise to an anticompetitive effect because of portfolio power, especially since most such transactions will be procompetitive. The chapter traces the evolution of conglomerate enforcement policy in the United States and Europe and considers the appropriateness of current enforcement policy.