Tuesday, December 11, 2018
Koren Wong-Ervin, Director of IP & Competition Policy at Qualcomm Incorporated and Senior Scholar at China's University of International Business & Economics describes Antitrust Analysis of Vertical Mergers: Recent Developments and Economic Teachings.
ABSTRACT: The generally well-accepted belief motivating modern antitrust analysis of vertical mergers—i.e., acquisitions that combine companies in different levels of the same supply chain—is that they are generally procompetitive or neutral. That belief is based upon a significant body of empirical evidence. Indeed, as former U.S. Federal Trade Commission (FTC) Bureau of Economics head Francine Lafontaine and Margaret Slade concluded, “[c]onsistent with the large set of efficiency motives for vertical mergers . . ., the [empirical] evidence on the consequences of vertical mergers suggests that consumers mostly benefit from mergers that firms undertake voluntarily.” That view of the empirical evidence is consistent with other meta-studies of the empirical evidence by leading industrial organization economists from academia and the U.S. antitrust agencies. Consistent with this evidence, the U.S. antitrust agencies typically have rarely challenged vertical mergers. When they have challenged vertical mergers, they have tended to resolve concerns with narrowly tailored behavioral remedies, such as firewalls to prevent the sharing of rivals’ competitively sensitive information, non-discrimination clauses to eliminate incentives to disfavor rivals, and requirements to supply and/or license competitors.