Tuesday, November 24, 2015
Matthew Jennejohn, Brigham Young University - J. Reuben Clark Law School analyses Innovation and the Institutional Design of Merger Control.
ABSTRACT: Making enforcement decisions under conditions of uncertainty is a central problem in antitrust policy, as it is in other domains. Particularly in high technology markets characterized by rapid rates of innovation, traditional analytical approaches struggle to identify potentially anticompetitive behavior with fidelity. A growing body of antitrust scholarship addresses this issue from the perspective of decision theory, but sustained attention has yet to be paid to the equally critical question of institutional design — i.e., how antitrust institutions should be structured to reduce or at least manage uncertainty. This Article leverages research undertaken in other substantive areas to provide a preliminary analysis exploring how antitrust institutions are transforming to respond to the volatile markets characteristic of the 21st century economy. With the antitrust law of mergers as its focus, this Article suggests that high-innovation markets immerse competition agencies in uncertainty to such an extent that the agencies themselves must employ an entrepreneurial approach in order to assess competitive effects. That approach, implemented through a number of novel policies, mirrors an “experimentalist” institutional form that has been identified in other areas, ranging from privately-ordered corporate alliances to public regulatory regimes, such as environmental protection. Experimentalist institutions create a decision-making framework that allows agencies to construct case-specific analytical models that capture the dynamics of high-innovation markets while avoiding the problem of being overwhelmed by the enormous amount of information produced through the course of a merger investigation. Given the widespread consensus on the general substantive ends, if not the details, of antitrust law, this overlooked institutional transformation is one of the most important topics in contemporary competition policy.
This institutional transformation is more emergent than complete, however. Progress towards a more experimentalist approach to merger review is partial, and in that respect the institutional infrastructure of merger review is out of balance. My analysis introduces a number of new policy issues to consider for completing the institutional evolution of merger review, including rebalancing the exchange of information between merging parties and the agency, introducing real-time judicial oversight of disputes between merging parties and an agency during an investigation, and further expanding the scope of contingent remedies.