Friday, December 30, 2011
Posted by D. Daniel Sokol
John E. Kwoka, Northeastern University - Department of Economics and Diana L. Moss, American Antitrust Institute address Behavioral Merger Remedies: Evaluation and Implications for Antitrust Enforcement.
ABSTRACT: The 2011 revision to the Antitrust Division Policy Guide to Merger Remedies signals a shift in the Department of Justice’s approach to merger remedies. The earlier Remedies Guide, issued in 2004, emphasized structural remedies such as divestitures as the preferred approach to resolving competitive problems with mergers. In contrast, the 2011 revision is considerably more favorably disposed toward the use of behavioral remedies that proscribe specified anticompetitive behaviors of the merged companies. This apparent policy shift is illustrated by the behavioral remedies employed by the DOJ in three recent merger cases – Ticketmaster-Live Nation, Comcast-NBCU, and Google-ITA. These three cases involve the use of multiple behavioral remedies, ranging from access conditions (e.g., licensing and non-discrimination requirements), firewalls, anti-retaliation provisions, to arbitration requirements, and provide for monitoring and compliance enforcement.
The expansive new approach to behavioral remedies raises a number of concerns about their likely operation, effectiveness, and requirements for ongoing government monitoring and compliance enforcement. Many of these issues are similar to problems encountered in traditional industry regulation, ranging from countervailing incentives to implementation costs. Behavioral remedies also pose practical problems for antitrust enforcement. This paper identifies a number of issues that warrant attention and prompt some concern. Based on this early analysis, a number of observations and policy recommendations are offered.