Reputation and Personality Traits in Antitrust Merger Analysis

Reputation and Personality Traits in Antitrust Merger Analysis

Steven C. Salop

Georgetown University Law Center

Abstract

Courts in recent merger cases have accepted defenses to alleged anticompetitive conduct based on the reputation of the acquiring firm as well as the reputations and personalities of the CEO and employees of the firm. At the same time, it has been suggested that acquisitions by some private equity firms or others might be disfavored because of their reputations for having the ability and incentive to set high prices or adopt debt-driven business plans that tend to reduce wages and raise the risk of bankruptcy, with associated economic harms to consumers and workers. These developments raise several policy issues regarding the proper scope of merger analysis and law. They also raise interesting issues regarding the roles and evidence of reputation and personality traits affecting the likely conduct of companies and the CEOs that lead those companies, issues that have been studied by experimental economists and psychologists.