Skip to main content Accessibility help
×
Home
Hostname: page-component-99c86f546-vl2kb Total loading time: 0.282 Render date: 2021-11-28T10:05:31.565Z Has data issue: true Feature Flags: { "shouldUseShareProductTool": true, "shouldUseHypothesis": true, "isUnsiloEnabled": true, "metricsAbstractViews": false, "figures": true, "newCiteModal": false, "newCitedByModal": true, "newEcommerce": true, "newUsageEvents": true }

15 - Horizontal Mergers

Published online by Cambridge University Press:  12 November 2009

Keith N. Hylton
Affiliation:
Boston University
Get access

Summary

This chapter discusses the economics of mergers and traces the development of horizontal merger doctrine. A horizontal merger may yield efficiency gains by cutting production or marketing costs, and at the same time may reduce society's wealth to the extent that the merged entity sets price above the competitive level. An economic reasonableness standard would assess these welfare tradeoffs in determining whether a horizontal merger should be deemed anticompetitive. However, as we have seen in other areas of antitrust, a reasonableness test places heavy administrative burdens on enforcement agencies.

The tension between administrative and economic reasonableness concerns is particularly noticeable in the development of horizontal merger doctrine. After announcing a truncated reasonableness test in its 1962 Brown Shoe opinion, the Supreme Court moved away from it in subsequent decisions, toward a standard that put primary emphasis on market structure. This drift continued until 1974, when the Court signaled a return to the Brown Shoe standard in its General Dynamics decision.

REASONS FOR MERGING AND IMPLICATIONS FOR LAW

Why is antitrust law concerned about mergers? Two reasons appear in the literature. (1) Concentration, which may lead to tacit or explicit collusion. (2) Foreclosure; a forward vertical merger may foreclose retail outlets to other manufacturers, or a backward vertical merger may reduce the number of suppliers to a given manufacturer.

The concentration issue forces us to return to the conscious parallelism debate of Chapter 3.

Type
Chapter
Information
Antitrust Law
Economic Theory and Common Law Evolution
, pp. 311 - 332
Publisher: Cambridge University Press
Print publication year: 2003

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Send book to Kindle

To send this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle.

Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

  • Horizontal Mergers
  • Keith N. Hylton, Boston University
  • Book: Antitrust Law
  • Online publication: 12 November 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511610158.016
Available formats
×

Send book to Dropbox

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Dropbox.

  • Horizontal Mergers
  • Keith N. Hylton, Boston University
  • Book: Antitrust Law
  • Online publication: 12 November 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511610158.016
Available formats
×

Send book to Google Drive

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Google Drive.

  • Horizontal Mergers
  • Keith N. Hylton, Boston University
  • Book: Antitrust Law
  • Online publication: 12 November 2009
  • Chapter DOI: https://doi.org/10.1017/CBO9780511610158.016
Available formats
×