Antitrust reviews of mergers and acquisitions between competitors at the Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC) are guided by the Horizontal Merger Guidelines, which were issued in their current form in 1992 and revised slightly in 1997. The guidelines provide an analytical framework to assess whether a transaction is likely to lead to a substantial lessening of competition in violation of Clayton Act § 7.
According to the guidelines, the agencies first define a “relevant market” — composed of a product market and a geographic market — based on the likely reaction of customers to a small but significant and nontransitory price increase in that market. Second, they assess pre- and post-merger concentration using the Herfindahl-Hirschman Index (HHI), which measures the sum of the squares of each competitor’s market share. Third, the agencies examine competitive effects — either potential unilateral effects (i.e., the ability of the post-merger firm to raise prices profitably) and/or coordinated effects (i.e., the likelihood that the transaction will facilitate tacit coordination among firms in the market) — and evaluate the likelihood that rivals would enter or expand to counteract any price increases by the merging firms. Finally, the agencies evaluate prospective pro-competitive efficiencies and other defenses.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
