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The Federal Trade Commission’s Bureau of Economics today released an Economic Issues paper entitled, “Transparency at the Federal Trade Commission: The Horizontal Merger Review Process, 1996-2003.” The paper, which is available now as a link to this press release on the Commission’s Web site, supplements the FTC’s 2004 release of its horizontal merger investigations data and presents an econometric analysis of the agency’s merger review process between 1996 and 2003, using data from 151 transactions evaluated during that time.

According to the paper, the Commission’s enforcement policy has been stable during the eight years studied. Using learning from concentration-based models, as well as models incorporating additional factors when data are available, the paper adds to the insights from the FTC’s 2004 data release. Further detail is provided for the review of the agency’s data-collection processes, including a presentation of summary statistics for the merger transparency data. The estimates produced by the models suggest that, in addition to the market structure variables, verified consumer complaints, market entry considerations, and in some cases, “hot” documents (documents associated with the merging parties that imply the merger is likely to be anticompetitive) affect the Commission’s enforcement decisions.

In the paper, the Bureau posits a number of enforcement insights gleaned through the data collection and evaluation process. First, increases in Herfindahl data (HHI) and changes in HHI related to a particular transaction generally make enforcement more likely, as do reductions in the number of significant competitors. Second, enforcement appears more likely in the oil, grocery, and chemical industries. Third, in the eight years covered by the study, there has been no structural shift in enforcement patterns. That is, “neither political control of the Federal Trade Commission nor the merger wave is statistically related to the enforcement outcome.”

Finally, the Bureau cautions against using the modeling data as the sole means of predicting future Commission actions in the merger enforcement arena.

Copies of the Bureau of Economics report can be found on the FTC’s Web site at

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Office of Public Affairs

Staff Contact:
Malcolm B. Coate
Bureau of Economics