Merger remedies may be offered by the merging parties or demanded by antitrust enforcers in cases in which a merger promises benefits to consumers but also risks harm to competition in one or more markets. This article considers the economic issues that arise in developing merger remedies – and in particular discusses the use of self-enforcing versus non-self-enforcing remedies. The article then addresses how these issues relate to the recent concerns raised by the Department of Justice regarding whether Live Nation was following the requirements of the remedy associated with its merger with Ticketmaster in 2010.

By Mary Coleman, David Weiskopf1

 

I. INTRODUCTION

Merger remedies may be offered by the merging parties or demanded by antitrust enforcers in cases in which a merger promises benefits to consumers but also risks harm to competition in one or more markets. Blocking such a merger would certainly prevent the competitive harm from occurring, but it would also deny the consumer benefits that would otherwise flow from the combination of assets. Remedies that reliably target the source of competitive harm allow society to reap the benefits of efficiency-enhancing mergers that would, in the absence of remedies, raise competitive concerns. In this article, we consider the economic issues that arise in developing merger remedies – and in particular discuss the use of self-enforcing versus non-self-enforcing remedies. We then discuss how these issues relate to the recent concerns raised by the Department of Justice (“DOJ”) regarding whether Live Nation was following the requirements of the remedy associated with its merger with Ticketmaster in 2010.

 

II. SELF-ENFORCING AND NON-SELF-ENFORCING REMEDIES

Merger remedies can be distinguished by whether or not they require ongoing enforcement by the antitrust authorities. Self-enforcing remedies, also referred to as structural remedies, are those that do not require ongoing enforcement. These remedies often involve the sale of physical assets or the sale or licensing of intellectual property (“IP”) rights by the merging firms to strengthen existing competitors or create new competitors. Non-self-enforcing remedies, also referred to as behavioral or conduct remedies, require ongoing monitoring by the antitrust authorities and involve constraints on post-merger conduct by the merged firm. Examples include firewall and non-discrimination provisions.

Self-enforcing remedies are typically preferred by antitrust enforcers. However, antitrust enforcers may be willing to consider behavioral remedies if structural remedies are not practical or would also eliminate significant competitive benefits from the transaction as whole. For example, guidance issued by the Federal Trade Commission (“FTC”) in 2012 indicates a willingness to consider non-structural remedies in some circumstances.2 Similarly, the remedies policy guide issued by the Antitrust Division of the DOJ in 2011 expressed openness towards a variety of remedies, noting that both structural and conduct remedies may be usefully employed, depending on the particular circumstances of the proposed merger.3 However, recent DOJ statements indicate that they currently are less willing to consider non-structural remedies.4 DOJ’s resistance to non-structural remedies is d