Effective European Antitrust: Does EC Merger Policy Generate Deterrence?

Should Merger Policy Be Changed? An Antitrust Perspective

Over the past 15 years, a revolution has occurred in U.S. merger policy. ~ Antitrust attacks on non-horizontal mergers have all but disappeared. Regulation of horizontal mergers now starts from the presumption that "the vast majority of horizontal mergers pose no market power problems and should simply be approved rapidly" (Schmalensee 1987, p. 44). In February 1986, the Reagan adminisration ur...

Antitrust Enforcement and Marginal Deterrence

We study antitrust enforcement in which the fine must obey four legal principles: punishments should fit the crime, proportionality, bankruptcy considerations, and minimum fines. We integrate these legal principles into an infinitely-repeated oligopoly model. Bankruptcy considerations ensure abnormal cartel profits. We derive the optimal fine schedule that achieves maximal social welfare under ...

Making European Merger Policy More Predictable

Entry Deterrence by Non-Horizontal Merger

We study when and how pure non-horizontal mergers, whether cross-product or vertical, can deter new entry. Organizational mergers implicitly commit firms to more aggressive price competition. Because heightened competition deters entry, mergers can occur in equilibrium even when, absent entry considerations, they do not. We show that, in order to prevent a flood of entrants, mergers arise even ...

Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence

S hould the United States pursue a vigorous antitrust policy? Soon after the passage of the Sherman Antitrust Act of 1890, economists led by John Bates Clark (1901) argued that the enforcement of such laws should be informed by the prevailing economic theory on the merits of competition and the extent to which firms’ conduct can enhance or weaken competition. However, economic theory since then...