American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Concentration Thresholds for Horizontal Mergers
American Economic Review
vol. 112,
no. 6, June 2022
(pp. 1915–48)
Abstract
Concentration-based thresholds for horizontal mergers, such as those in the US Horizontal Merger Guidelines, play a central role in merger analysis but their basis remains unclear. We show that there is both a theoretical and an empirical basis for focusing solely on the change in concentration, and ignoring its level, in screening mergers for whether their unilateral price effects will harm consumers. We also argue that current threshold levels likely are too lax, unless one expects efficiency gains of 5 percent or greater, or other factors such as entry and product repositioning to significantly constrain the exercise of market power postmerger.Citation
Nocke, Volker, and Michael D. Whinston. 2022. "Concentration Thresholds for Horizontal Mergers." American Economic Review 112 (6): 1915–48. DOI: 10.1257/aer.20201038Additional Materials
JEL Classification
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- G38 Corporate Finance and Governance: Government Policy and Regulation
- K21 Antitrust Law
- L13 Oligopoly and Other Imperfect Markets
- L41 Monopolization; Horizontal Anticompetitive Practices