Premerger Notification and the Incentive to Merge and Litigate

Abstract

The original Clayton Act's (15 U.S.C. 18) prohibition of certain mergers was intended to be preventive in nature. Mergers having the potential to reduce competition were to be challenged prior to consummation. Historically, however, most of the complaints brought by the Department of Justice (DOJ) or the Federal Trade Commission (FTC) were initiated after mergers had been consummated. Failure to challenge mergers prior to consummation was not, however, deliberate. Obstacles to obtaining preliminary injunctions were high. Moreover, once an illegal merger had taken place, it often took five to six years to resolve the case. The inability to secure what was considered adequate postacquisition relief led to the belief that the government had achieved only Pyrrhic victories.1 In response to these conditions, the Congress passed the HartScott-Rodino Antitrust Improvement Act of 1976 (HSR).2 A major objective of the Act was to provide antitrust authorities with the means to handle illegal mergers expeditiously by establishing premerger notification requirements. To that end, Title II of the Act facilitates premerger investigations and enhances