Collusion Theories in Merger Analysis : Still Alive and Kicking

This paper updates my 2008 study of the use of collusion analysis in the merger review process published in the Competition Policy International Journal. After an overview of developments in merger policy in the Merger Guidelines, this paper compares the level and outcome of collusion and unilateral effects analyses over the 1993-2010 time period. Remarkably little change in relative activity is observed and challenge rates remain relatively constant once the samples are standardized for entry impediments. Focusing on the counts of significant rivals, the data shows that both four-to-three and three-to-two mergers tend to end in challenges when entry evidence is strong. Moreover, a reasonable case can be made that the challenge rates are higher in homogeneous goods markets when five or more premerger rivals exist, although the small sample size limits this conclusion. Thus overall, facts, not theory, appear to affect FTC evaluations