The Decline of Coordinated Effects and How to Reverse It

The Decline of Coordinated Effects and How to Reverse It

D. Daniel Sokol

USC Gould School of Law; USC Marshall School of Business

Sean Sullivan

University of Iowa College of Law

Abstract

Opposition to anticompetitive coordination once animated merger policy. But after consecutive decades of decline, evidence now suggests that coordinated effects cases are disfavored among enforcers and are rarely pursued. This change in merger enforcement is dangerous and puzzling. Coordinated effects challenges are antitrust law’s best and often only opportunity to prevent anticompetitive coordination in concentrated markets. Why are coordinated effects theories not being vigorously pursued?

In this Article, we seek to expose the decline in coordinated effects enforcement and the threat it poses to the maintenance of competitive markets. We do so in three steps. First, we explain the special significance of coordinated effects enforcement in the broader antitrust framework. Second, we document the empirical decline in coordinated effects enforcement using multiple data sources. Third, we trace the causes of this decline to discrete changes in antitrust law and enforcement policy; we expose the flaws in these changes, and we propose specific steps to reverse them.