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The Federal Trade Commission’s Bureau of Economics has announced a revamped Merger Retrospective Program, which will expand and formalize the Bureau’s retrospective research efforts that have already produced studies analyzing the effects of a range of consummated mergers over the last 35 years.

Merger retrospective analysis seeks to determine, after the fact, whether a merger has affected competition in one or more of the markets impacted by the merger. The analysis can shed light on whether the agency’s threshold for bringing an enforcement action in a merger case has been too permissive. It can also assess the performance of a pricing pressure index, merger simulation model, or other tools used to predict the effects of a proposed merger.

“Merger retrospectives are a powerful way of engaging in critical self-examination to see if our antitrust enforcement is working correctly,” said FTC Chairman Joseph Simons. “The goal of this initiative is to encourage economists both inside and outside the agency to carry out more retrospective studies to test our analytical tools and strengthen our enforcement efforts.”

Although the FTC’s Merger Retrospective Program has provided many insights over the years that have informed the FTC’s enforcement decisions, the Bureau of Economics seeks to expand the program by:

  • addressing antitrust questions (e.g., do mergers create labor market monopsony power?) that have not been extensively studied in previous retrospective merger analyses and expanding the analysis to industries not already studied;
  • more fully explaining the lessons that can be drawn for enforcement; and
  • communicating in an open and transparent way to the broader community of antitrust scholars and practitioners the program’s conclusions about the effects of mergers and the performance of different tools.

Some of the new initiatives to the revitalized Merger Retrospective Program include:

  • providing an annual report on the lessons from recent retrospective studies;
  • evaluating the tools which may be used to screen and assess the competitive effects of mergers, such as the “price pressure” measures that have been proposed for evaluating horizontal mergers, vertical mergers, and full-fledged merger simulation;
  • developing and maintaining a website devoted to research on retrospectives that includes a bibliography of retrospective studies;
  • dedicating time and resources to retrospective projects;
  • organizing and supporting sessions every year at a major conference on industrial organization; and
  • devoting a session every third year at the FTC’s Annual Microeconomics Conference to recent retrospective research.

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David R. Schmidt
Bureau of Economics