Should Price Modeling Remain in the Merger Guidelines?

The 2022 revision of the Merger Guidelines is likely to introduce a number of controversial changes; this paper focuses on one potential change, the elimination or marginalization of price modeling in merger analysis. Recognized as useful in the 2010 Guidelines, these models have been applied, with mixed results in a number of recent litigations. However, the analytical disconnect, between using these static models to predict price and innovation being the driving force of product differentiation, raises concerns. In some situations, the product design is the core aspect of competition, while in other situations price and non-price conditions of sale interact such that the idea of firms dictating prices for differentiated goods is an illusion. By exploring the foundational models of price modeling, it is possible to offer some insights. In conclusion, returning unilateral effects analysis to its historical focus on the totality of the evidence is a good idea. 

By Malcolm B. Coate^[1]

I. INTRODUCTION

The expected revision of the 2010 Merger Guidelines is likely to result in changes to the merger review process at the enforcement agencies, some of which were signaled by official commentary. In a recent speech, Assistant Attorney General Jonathan Kantor raised three issues with the consumer welfare standard; the approach that controlled antitrust enforcement for the last 40 years.^[2] His first concern noted the consumer welfare standard offered no protection agains