Coordinated Effects in Merger Analysis: An Introduction

Abstract

This Article focuses on the economics of “coordinated effects” in merger assessment. The Article will provide an interested practitioner with a quick guide to the modern literature on this topic and also offer some insights into the type of evidence that may be relevant in a coordinated effects merger case. The Article closes with a few remarks on the public policy issues that are triggered by potential challenges to a merger through coordinated effects. In this respect, it is important to recognize that, as compared to unilateral effects analyses, there is much less analytical rigor and much more reliance on a broad range of qualitative indicators when gauging the likelihood of such effects. This makes counseling more difficult and litigation much more unpredictable. Indeed, one often hears that while a reduction in a market from “5 to 4” firms likely will be “okay” with the reviewing agency, going from “4 to 3” can create a serious risk of a challenge. Actually, in the coordinated effects area, matters are often more (or less) complicated than that, and good evidence that is clearly presented can overcome initial skepticism by the Agency’s staff and also sway the judge.