An Economist’s Thoughts on Behavioral Remedies in Merger Enforcement

There is a substantial literature examining the experience in both the United States and the European Union with the imposition by enforcement agencies of remedies as a condition for a merger to proceed without challenge. The broad goals of the agencies have arguably remained consistent over the years, and a number of more specific “lessons” of the past seem to have become broadly accepted, including both a general preference for structural over behavioral remedies but also a willingness to impose behavioral remedies in certain, limited situations, either in support of structural remedies or on their own. This paper examines some arguably underappreciated complications arising from the imposition of behavioral remedies, including the difficulty of enforcing non-discrimination provisions, the danger of perverse incentives provided by such provisions, and the counter-argument – common in the debates regarding infrastructure access pricing – that in some circumstances discrimination itself may be pro- rather than anti-competitive.

By Russell Pittman¹

There is by now a substantial literature examining the experience in both the United States and the European Union with the imposition by enforcement agencies of remedies as a condition for a merger to proceed without challenge.² Increased recent interest may have been encouraged by both the refusal of the Antitrust Division of the Justice Department (“DOJ”) to accept a s