HKS Affiliated Authors

Professor of Public Policy, HKS; Bruce V. Rauner Professor of Business Administration, HBS


August 2023, Interview: "eemore, as I eagerly read the draft Merger Guidelines, I wonder what they may accomplish. Clearly, the Agencies (the Federal Trade Commission and Department of Justice Antitrust Division) are informing the business and antitrust communities that they intend to investigate more transactions and file more merger challenges. This should work in the desired direction: if mergers have lower expected returns due to increased financial and time costs of review, a higher probability of litigation, and possibly a greater likelihood of being blocked, then we should expect to see fewer mergers. Lower expected returns may deter mergers of lesser strategic value to the parties, including mergers with few efficiencies and/or small or no anticompetitive effects. Deterring the former is probably good, while deterring the latter is not clearly so. Given that merger review and litigation costs have a heavy fixed component, any deterrent effect will be less for larger transactions. Raising the bar on a large swath of transactions is a blunt instrument that may not, on its own, deter the mergers the Agencies most want to deter. However, if the draft Merger Guidelines spark a change in how judges weigh theories of harm and evidence—an uncertain proposition to me at this early stage—then the deterrent effect could become more targeted." Read Via ProMarket