Merger Enforcement at the Reagan/Bush FTC

Abstract

The Reagan/Bush administration introduced merger enforcement as we know it today. With the Hart-Scott-Rodino (HSR) premerger reporting system recently set in place and the revised Merger Guidelines drafted early in the first Reagan administration, antitrust regulators were well prepared for the merger wave of the 1980s. To accomplish almost any significant transaction, firms had to file an HSR report with the enforcement agencies (the Federal Trade Commission (FTC) and the Department of Justice (DOJ)) and observe a 30 day waiting period.2 Investigations were then undertaken by either the FTC or DOJ and if competitive concerns were raised, a “second request” for information would be issued, triggering another waiting period. Firms were required to submit the relevant documents for government inspection and wait a short period of time before completing their transaction. If the enforcement agency still had competitive concerns, a complaint would be issued and consummation of the merger would be put on hold until either a settlement was reached or the transaction was reviewed by a federal court. This chapter summarizes enforcement activity over the ten year period from 1983 to 1992 and searches for empirical regularities in the data that highlight the decision making structure.