Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Thursday, April 14, 2011

Margin of Error: The Flawed Paradigm in the New Merger Guidelines

Posted by D. Daniel Sokol

Michael G. Baumann (Economists Inc.) & Paul Godek (Compass Lexecon) discuss Margin of Error: The Flawed Paradigm in the New Merger Guidelines.

ABSTRACT: The U.S. Department of Justice ("DOJ") and the Federal Trade Commission ("FTC"), the two federal agencies that review mergers, recently issued new Horizontal Merger Guidelines, ("Guidelines"). The Guidelines, first issued in 1984 and revised in 1992 and 1997, comprise a formal statement of the agencies' approach to merger analysis, an approach that has generally reflected the economic concepts of markets and market power. The effort to explain merger policy, and to have that policy reflect economic principles, is laudable regardless of what one thinks of the final product. But the new version of the Guidelines offers a distinct break from the past and a new paradigm for merger analysis. The analytical core of the new Guidelines, however, relies on an assumption that was long ago shown to be invalid. Here we revisit that history and demonstrate that the paradigm in the new Guidelines is not consistent with basic economic principles.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/04/margin-of-error-the-flawed-paradigm-in-the-new-merger-guidelines.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef014e6011f926970c

Listed below are links to weblogs that reference Margin of Error: The Flawed Paradigm in the New Merger Guidelines:

Comments

Post a comment