Horizontal Merger Guidelines Review Project
The Merger Guidelines should provide a clear guide to the methodology followed by the Agencies both in their internal review of potential mergers and in litigation, should that stage be reached. I believe that some revision of the Guidelines and especially additional commentary jointly issued by the FTC and the DOJ is appropriate to further explain the methodologies and approaches followed by the Agencies in various circumstances. I have specific comments at this time on Questions 2, 4, and 13. I have provided a summary of my comments below and have attached a document which includes an expanded response for each question. Response to Question 2: The Guidelines should be revised to discuss evidence considered regarding competitive effects. However, extended comments in the Guidelines themselves regarding the specifics of different types of competitive effects evidence might not be a positive change because the discussion will either be insufficiently detailed and/or make the Guidelines themselves less clear (e.g., too long). I think it is more appropriate to discuss evidence regarding competitive effects briefly in the Guidelines (in section 2.2), perhaps listing the types of evidence considered in competitive effects, and to develop a separate document that discusses the application of the Merger Guidelines, including this area, in depth (similar to the Commentary on the Merger Guidelines). However, in doing so, any comments relating to the use of types of evidence used in evaluating competitive effects should reflect the benefits and shortcomings of each type of evidence. Please see my attachment for specific discussions about each type of evidence referenced in the question. Response to Question 4: The Guidelines should not be adjusted to reflect the suggestion in number 4 that the hypothetical monopolist test be simplified so that any collection of substitute products may constitute a relevant market if a hypothetical monopolist would find it possible impose a small but significant and non-transitory increase in price (SSNIP). Nor should the "smallest market" principle be abandoned. The Guidelines would benefit from a more explicit discussion about when aggregation of markets can occur and specify that this can happen when there is identical or substantially identical analysis across products due to supply substitution. Response to Question 13: Companies that are uncommitted entrants should be considered market participants and assigned weight in market shares. Neither the Merger Guidelines nor the Commentary on the Horizontal Merger Guidelines provides guidance on how the Agencies assess potential uncommitted entrants in practice - for instance, at what level do sunk costs become significant. In this case, some discussion with actual examples could be helpful in a commentary on the Merger Guidelines (though not necessarily in the Guidelines themselves). Uncommitted entrants should be assigned weight according to the capacity that could be used in the defined market or according to sales that are estimated would be part of the defined market.