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Unilateral Effects in Merger Analysis - Chapter 9 - International Antitrust Law & Policy: Fordham Competition Law 2010
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Originally from: International Antitrust Law & Policy: Fordham Competition Law 2010 - Hardcover International Antitrust Law & Policy: Fordham Competition Law 2010 - PDF
Preview Page Chapter 9
UNILATERAL EFFECTS IN MERGER
ANALYSIS MR. ARQUIT: If we could get started, it would be terrific.
My name is Kevin Arquit. It’s my pleasure to welcome you back
from lunch.
This afternoon’s topic is Unilateral Effects in Horizontal Merger
Analysis. From the United States’ perspective anyway, there could not be a
more timely topic. Barely a month ago, the U.S. Department of Justice and
the Federal Trade Commission replaced Guidelines that initially were
issued in 1992 with a completely new set of Guidelines. I think that
nowhere are the changes more pronounced in these Guidelines than in the
area of unilateral effects.
Not to jump the gun, by just by way of a very quick backdrop here,
for many years U.S. merger analysis has really hinged on one of two
theories of competitive effect. One is coordinated effect, which is just
oligopoly theory. The other is unilateral effect, which is caused by what a
single firm can do following the merger.
In the context we are talking about here today, by unilateral effect
what we mean is a situation where as the result of a merger the new entity
has increased pricing flexibility in a situation where products are very
close substitutes for one another. The notion is that if you raise prices on
one of the products after the merger, sure you are going to lose some sales
every time you raise prices, you’re going to lose sales, but if you now own
the next closest substitute, some of those sales are going to be recaptured.
Presider:
Kevin J. Arquit, Simpson Thacher & Bartlett LLP, New York
Participants:
Joseph Farrell, Federal Trade Commission, Washington
Thorsten Mäger, Hengeler Mueller, Dusseldorf
Miguel de la Mano, European Commission, Brussels
Alison Oldale, UK Competition Commission, London
Michael N. Sohn, Davis Polk, Washington
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