The New Merger Guidelines—A Blueprint for Microeconomic Analysis

Abstract

The following article on the new merger guidelines describes the guidelines for merger analysis issued this summer by the Department of Justice and demonstrates how they work. It compares the Justice Department guidelines with the contemporaneous statement by the Federal Trade Commission on horizontal mergers, with the superseded 1968 Guidelines of the Department of Justice, and with the Supreme Court case law. The author concludes that the new guidelines provide an excellent methodology for analyzing when a merger will give the merging parties a significant increment in the power to raise price above the current market price. She observes that such increased power over current price is one reason but not the only reason why the effect of a merger “may be substantially to lessen competition” within the meaning of the Celler-Kefauver Amendment to section 7 of the Clayton Act.

In appendices, the author provides a historical note on the derivation of the concentration index used in the guidelines, and a table applying the new guideline standards to each Supreme Court case decided under amended section 7 of the Clayton Act.