Originally from:
International Antitrust Law & Policy: Fordham Competition Law 2010 - Hardcover
International Antitrust Law & Policy: Fordham Competition Law 2010 - PDF
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Chapter 8
PRICING OF DIFFERENTIATED
PRODUCTS IN THE 2010 HORIZONTAL
MERGER GUIDELINES;
SOME UNANSWERED QUESTIONS
Michael N. Sohn*
The U.S. Department of Justice (“DOJ”) and the Federal Trade
Commission (“FTC”) recently issued a final version of the Horizontal
Merger Guidelines (the “2010 Guidelines”).1 The agencies had issued draft
revisions for comment earlier this year.2 For the most part, the proposed
revisions were not controversial and many lauded the effort of the
enforcement agencies to update the 1992 Guidelines and to increase
transparency and understanding of the ways in which the agencies
analyze the anticompetitive potential of the transactions they review.3
However, the expanded discussion of unilateral pricing of differentiated
products in the proposed revision raised a number of questions and drew
some criticism. This paper identifies the concerns expressed, and explores
the extent to which the agencies did, or did not, respond to those concerns
in the final version.
I. THE ROLE OF MARKET DEFINITION IN ANALYZING
PRICING EFFECT
The idea of analyzing the potential unilateral effects of a merger and
the use of diversion ratios in that analysis are not new with the 2010
Guidelines. Section 2.21 of the 1992 Guidelines addresses unilateral
pricing of differentiated products in terms which at first blush seem quite
similar to the discussion in the 2010 Guidelines:
A merger between firms in a market for differentiated products
may diminish competition by enabling the merged firm to profit
by unilaterally raising the price of one or both products above
Michael N. Sohn, Davis Polk & Wardwell LLP, Washington