In the May issue of Concurrences, NERA Senior Managing Director James Mellsop and Director Dr. C.-Philipp Heller discuss the relationship between lax enforcement of antitrust policy and increased market power in their article “Is Lax Enforcement of Antitrust Policy to Blame for an Increase in Market Power?” While concerns about rising market power and concentration have been widely discussed, the evidence on this issue offers mixed findings. Some argue that insufficiently tough enforcement of antitrust laws is a major cause for increased market power, but recent analysis suggests neither concentration nor markups have substantially increased overall.

In the article, the authors recap relevant economic literature on alleged increases in market power and what, if any, conclusions can be drawn by the success or failure of antitrust law. They also discuss whether changing the perspective beyond the consideration of consumer welfare to also consider economic objections such as the protection of small businesses, diversity, or sustainability changes the assessment. They demonstrate an economic policy that accepts efficiency-enhancing mergers may increase market concentration and margins while simultaneously improving consumer welfare. Finally, the authors conclude that, while it is possible to find fault with individual antitrust decisions, establishing a causal link of antitrust policy on economy-wide market concentration is difficult.