Vertical Merger Guidelines and the Rule of Law

Abstract

Mid-1960s Supreme Court decisions undermined the rule of law by giving the government unbridled discretion in enforcing Section 7 of the Clayton Act. Since 1968, the government has promoted the rule of law through guidelines limiting discretion. The Vertical Merger Guidelines, however, place no meaningful limits on agency discretion. They articulate theories under which mergers can be harmful but neither specific nor general standards. They set out no principles for determining when a merger harms competition, rather than a competitor, and no criteria for determining when harm to competition is likely, rather than merely possible. Nor do they convey the agencies’ general attitude toward vertical mergers.