The Changing Nature of Efficiencies in Mergers and in Merger Analysis

Abstract

Efficiencies have long been an important aspect of the antitrust analysis of mergers, but in recent years there have been certain noteworthy changes in the nature and analysis of efficiencies. One change appears to be the greater ability of the antitrust agencies to evaluate conventional efficiencies carefully and critically. This is demonstrated by the analysis of efficiencies associated with a number of recent proposed mergers before the antitrust and regulatory agencies. The second important change concerns the types of efficiencies typically claimed by merging firms. Whereas in earlier years these largely involved scale economies, they now more often focus on dynamic efficiencies, quality benefits, and vertical economies. This article discusses each of these in turn and argues that these newer types of efficiencies pose new and greater challenges for analysis.