The ACCC Merger Guidelines: A Review

Posted by D. Daniel Sokol

Henry Ergas, Concept Economics, Eric Kodjo Ralph, EKonomics LLC, and Alex Robson, Concept Economics explain The ACCC Merger Guidelines: A Review.

ABSTRACT:  The Merger Guidelines released in March 2008 by the Australian Competition and Consumer Commission (ACCC) provide a guide to the analytical approach the ACCC intends to adopt to assessing mergers for the purposes of s.50 of the Trade Practices Act. The new Guidelines do a relatively good job in listing the factors that the contemporary economic literature identifies as potentially characterising mergers that reduce competition and harm consumer welfare. However, unlike the earlier Guidelines, they rarely explain the mechanism connecting the factors to the harm, and the conditions that need to be met for that harm to occur.

This paper provides a “user’s guide” to the Guidelines that explains the reasoning that underpins the Guidelines’ assertions, and draws attention to the assumptions on which those assertions rest. We also provide an economic assessment of the Guidelines and recommend a simpler criterion by which the ACCC should judge mergers.