NERA's Role In the Matter of Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc.

The Situation

In December 2012, Pinnacle Entertainment announced its $2.8 billion acquisition of Ameristar Casinos and filed merger papers with the Federal Trade Commission (FTC) in January 2013. In response, in May 2013 the FTC issued an administrative complaint against Pinnacle and Ameristar, challenging the merger. The FTC challenge alleges that the proposed deal would violate US antitrust law by reducing competition, which would lead to higher prices and lower quality for customers in the St. Louis, Missouri area, where the two companies are direct competitors, and the Lake Charles, Louisiana area, where the companies will begin to compete in 2014.

NERA's Role

NERA was retained by the FTC as outside experts to evaluate the competitive impact of the proposed transaction in the St. Louis and Lake Charles markets. A NERA team led by Senior Vice President Dr. Chetan Sanghvi and Vice President Dr. Timothy Watts examined the appropriate definition of relevant product and geographic markets as well as competitive effects.

The Result

NERA found that the marketplace is strongly differentiated on multiple dimensions -- spatial, vertical, and horizontal/product. Through the rigorous use of data and careful review of the parties' documents, the NERA team was able to locate both Pinnacle and Ameristar in differentiated product space and determine that the parties' casinos were located particularly close in differentiated product space. As a result, NERA concluded empirically that a meaningful number of consumers would suffer a loss in competition for their patronage.