Abstract

Since the initial Merger Guidelines in 1968, the Department of Justice and Federal Trade Commission have revised their merger enforcement screen over the course of six versions. This article examines the evolution of the geographic market component of the Guidelines and the economic implications of changing standards of market delineation on merger enforcement. Using an illustration from the beer industry, we chronicle the development of geographic market definition and its varying effects on merger enforcement over the past 50 years.

Highlights

  • The enforcement trajectory of the six Horizontal Merger Guidelines—1968, 1982, 1984, 1992, 1997, and 2010—serves as a chronicle of how merger enforcement has changed over the last 50 years

  • Using the Pabst Brewing Company and Blatz Brewing Company merger that was challenged by the Department of Justice (DOJ) in 1959, we show what facts might have been expected to be emphasized differently over time were one to follow the changes in the language of the Guidelines

  • As the Merger Guidelines became increasingly prominent in antitrust enforcement, the Federal Trade Commission (FTC) joined as an author

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Summary

Introduction

The enforcement trajectory of the six Horizontal Merger Guidelines—1968, 1982, 1984, 1992, 1997, and 2010—serves as a chronicle of how merger enforcement has changed over the last 50 years. To assess whether a merger is likely to cause harm or bring benefits to consumers, or to consider whether a firm or group of firms has geographic market power in general, one must know what market forces currently, or in the future, would thwart any attempt to increase prices (either unilateral or collusive). The answer to this question depends, among other things, on identifying the set of existing and potentially entering firms that would compete with the merging firms (or firms in question). There are two reasons for this: (1) Product markets and geographic markets are, as a matter of theory, defined conjointly; and (2) Identifying the set of market participants is critical for defining the relevant geographic markets (and vice versa). this paper’s focus is that of how geographic market definition is spelled out in the Guidelines over time

The 1968 Guidelines
The 1982 Guidelines
Guidelines
The 1992 Guidelines
The 1997 Guidelines
The 2010 Guidelines
An Example from the Beer Industry
Findings
Conclusion

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