Antitrust enforcement: an inflection point?

Abstract

PurposeThis paper seeks to examine the possibility that antitrust enforcement will strengthen in the USA. The study sets out to assess whether the merger of two large rivals into one even larger firm is likelier to prompt government challenge than has been true in the recent past.Design/methodology/approachThe paper examines the history of fluctuations in antitrust enforcement. Also, it reviews research in economics questioning the idea that mergers lead to efficiencies that bring about lower prices to consumers and allow struggling firms to survive. Finally, the paper assesses the negative effect of recession‐prompted bailouts on public perceptions of “behemoth” firms.FindingsThe study finds signs of possible change in enforcement priorities. Recent actions by the Federal Trade Commission and the Antitrust Division of the Department of Justice include considerations beyond the “Chicago School” emphasis on efficiency. Economic research questions that emphasis as well. So may voter unhappiness with government bailouts and the firm size that made them seem necessary.Practical implicationsSmall firms may want to encourage stronger enforcement; it may spare them the price‐setting power of megafirms they would otherwise face as suppliers or customers – or competitors. Larger firms, by contrast, may want to advocate the opposite, but draw up contingency plans if their chief growth strategy has been to purchase rivals.Originality/valueThis paper juxtaposes economic research, antitrust history, and recent economic issues to offer a perspective on what may be an important shift in antitrust enforcement.