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Malcolm Coate, Sep 24, 2009
In the 1980s, merger enforcement underwent two significant changes. First, the antitrust agencies fully developed the Hart-Scott-Rodino (“HSR”) merger review program. Both the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) gained experience in evaluating detailed data before reaching a decision on the likely competitive effect of a proposed transaction. Second, the DOJ issued, and then slightly revised, realistic Merger Guidelines that served as a roadmap for merger analysis. By the late 1980s, the formal structure of merger analysis was basically set. A merger review started with market definition, worked through concentration, entry considerations, and competitive analysis and ended with an evaluation of the efficiencies. Although the 1992 revisions of the Guidelines tweaked the analytical structure, the fundamental priorities of merger enforcement remained largely the same. This paper presents and analyzes the merger review process between 1989 and 2008 to explore the evolution of the FTC’s enforcement regime as the Presidency moved from George Bush (Bush I) to Bill Clinton to George W. Bush (Bush II). Section II illustrates the basic characteristics of merger transactions examined by the FTC. Data is tabulated to generate insights into long term trends in merger enforcement. The next section highlights more detailed information associated with horizontal merger investigations. Data on anticompetitive theories, structural characteristics within unilateral effects and collusion theories, and efficiencies are all evaluated. Section IV presents a new merger enforcement model to test for changes in the enforcement regime. Only efficiency analysis shows material change, suggesting FTC merger policy has been basically stable over the last 20 years. Section V concludes with a summary of the results.