It has been over 20 years since the Department of Justice (DOJ) and the
Federal Trade Commission (FTC) issued their first set of Horizontal
Merger Guidelines. Although the Guidelines were revised in 1992 and
1997, they have, for the most part, stood the test of time. However,
merger analysis continues to evolve, and notwithstanding the durability
of the underlying principles, the way in which the Guidelines are
applied remains the subject of much scrutiny and debate.
In this chapter from Economics of Antitrust: New Issues, Questions, and Insights,
NERA Senior Vice President Dr. Ramsey Shehadeh highlights some of the
important issues and questions raised by recent actions by the DOJ and
FTC. Specifically, he discusses the economic analyses that have been
applied to determine the potential for coordinated pricing after a
merger. In his discussion of several recent merger reviews by the DOJ
and FTC, he explains the importance of maintaining intellectual
consistency between the analysis of market definition and the theory of
coordinated competitive effects. As he explains, the failure to do so
can lead to fuzzy economic reasoning.