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Substantive Merger Analysis in Recent Cases and the Treatment of Coordinated Effects. William E. Kovacic U.S. Federal Trade Commission 7 th Annual Trans-Atlantic Antitrust Dialogue BIICL, London May 1, 2007. Coordinated Effects After Airtours and Arch Coal. Decisions to Prosecute
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Substantive Merger Analysis in Recent Cases and the Treatment of Coordinated Effects William E. Kovacic U.S. Federal Trade Commission 7th Annual Trans-Atlantic Antitrust Dialogue BIICL, London May 1, 2007
Coordinated Effects After Airtours and Arch Coal • Decisions to Prosecute • Structural presumptions attenuated • Greater burden to explain how post-Merger coordination will take place • Decisions Not to Prosecute • What constitutes a suitable basis for closing a file after Sony/BMG?
Significance of Coordinated Effects in Modern Practice • Relatively Few Litigated Coordinated Effects Cases • Greater Reliance in Analysis and Prosecution Upon Unilateral Effects • Temptations to fit matters artificially into unilateral effects framework?
US Horizontal Merger Cases Since 1960: A Structural Perspective • 1960s: 12 to 11 • 1970s: 9 to 8 or 8 to 7 • 1980s: 6 to 5 (1982 DOJ Guidelines) • 1990s: 4 to 3 [4 to 2, 3 to 2, 2 to 1] • 2000s: 4 to 3 [cf. Arch Coal (5 to 4)] • See also AirTours (evidence/fuller story)
Is Post-Merger Coordination Likely to Occur? • Permissive Assumptions in Recent Cases • Is past episode of collusion essential? • Learning from Modern Cartel Cases: Stigler Meets Coase and Williamson • Ingenuity and effort • Kovacic, Marshall, Marx, Raiff, Lessons for Competition Policy from the Vitamins Cartel, in The Political Economy of Antitrust 149 (Ghosal & Stennek eds., 2007)
Accounting for Incentives • Likelihood of Coordination: Importance of Anticipated Payoffs • Kovacic, Marshall, Marx & Schulenberg, Coordinated Effects in Merger Review, 2006 Fordham Competition Law Institute 271 (B. Hawk ed. 2007) • Kovacic, Marshall, Marx & Schulenberg, Quantitative Analysis of Coordinated Effects (October 2006).
Institutional Arrangements: The Research Agenda • Apply Lessons of Cartel Experience • Invest in Ex Post Assessments • Remedies: Canada, EU, UK, US, OECD • Case Studies: e.g. Cruise Lines • Kovacic, Using Ex Post Evaluations to Improve the Performance of Competition Authorities, 31 Journal of Corporation Law 503 (2006)