Substantive Merger Analysis in Recent Cases and the Treatment of Coordinated Effects

William E. KovacicU.S. Federal Trade Commission

7th Annual Trans-Atlantic Antitrust DialogueBIICL, LondonMay 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)