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James Langenfeld, Dec 16, 2009
As a contributor to the 1992 Guidelines revision and the 1993 Statements of Antitrust Enforcement Policy in Health Care, I am aware of the challenges that face the agencies in achieving consensus on potentially revising a very important policy document. Both the current Horizontal and Non-Horizontal Merger Guidelines in many ways do not reflect the practices of the agencies. In addition, there has been substantial new learning since 1992 on the impact of horizontal mergers, and even more relating to the impact of vertical mergers since 1984. All agree there are substantial differences between the potential lessening of competition from horizontal and vertical mergers. Horizontal mergers can lead to an immediate reduction in output and increased prices because a merger may make one firm out of two that are constraining each other’s prices, or may make coordination of pricing easier for the remaining firms. In contrast, anticompetitive theories relating to vertical mergers involve the merged firm expanding its output at the expense of its competitors, raising these rivals costs, and forcing a reduction in the sales of its competitors by more than any expansion of the merged firm’s output. The mergers that are most likely to cause competitive problems have been and will be horizontal, and revising the HMGs to reflect practice and learning is very important. However, the vertical part of the Non-Horizontal Merger Guidelines is even more out of touch with the agencies practices and learning, and they should also be revised if the agencies are serious about investigating and challenging vertical mergers.
