Horizontal Mergers, Market Structure, and Burdens of Proof

Since the Supreme Court's landmark 1963 decision in United States v. Philadelphia National Bank, antitrust challengers have mounted prima facie cases against horizontal mergers that rest on the level and increase in market concentration caused by the merger. Proponents of the merger are then pe...

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Bibliographic Details
Published in:The Yale law journal 2018-05, Vol.127 (7), p.1996-2025
Main Authors: HOVENKAMP, HERBERT, SHAPIRO, CARL
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Antitrust
Antitrust law
Burden of proof
COLLECTION: UNLOCKING ANTITRUST ENFORCEMENT
Consolidation and merger of corporations
CORPORATE GOVERNANCE
Economic theory
Enforcement
Evidence
Horizontal integration
Law and legislation
Laws, regulations and rules
Market concentration
Market structure
MERGERS
Presumption
Remedies
Supreme courts
TRADE LAW
TRADE PRACTICES
United States. Department of Justice
United States. Federal Trade Commission
Welfare
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Summary:Since the Supreme Court's landmark 1963 decision in United States v. Philadelphia National Bank, antitrust challengers have mounted prima facie cases against horizontal mergers that rest on the level and increase in market concentration caused by the merger. Proponents of the merger are then permitted to rebut by providing evidence that the merger will not have the feared anticompetitive effects. Although the means of measuring that concentration as well as the triggering levels have changed over the last half century, this basic approach has remained intact. This longstanding structural presumption has been critical to effective merger enforcement. In this Feature, we argue that the structural presumption is strongly supported by economic theory and evidence and suggest some ways to further strengthen it. We also respond to those who would weaken or eliminate it. Our analysis applies to the modern legal landscape, where the promotion of competition and the protection of consumer welfare are considered the purpose of merger enforcement. We also consider a promising recent legislative proposal that aims to strengthen and expand the structural presumption. In particular, we suggest that the proposal can be improved so as to strengthen merger enforcement, primarily by facilitating the government's establishment of its prima facie case, while staying true to the fundamental goal of antitrust to promote competition.
ISSN:0044-0094
1939-8611