Rethinking Merger Efficiencies

Crane FTP3 B.
doc 10/28/2011 10:34 AM

347
RETHINKING MERGER EFFICIENCIES
Daniel A. Crane*
The two leading merger systemsthose of the United States and the Euro-
pean Uniontreat the potential benefits and risks of mergers
asymmetrically. Both systems require considerably greater proof of effi-
ciencies than they do of potential harms if the efficiencies are to offset
concerns over the accumulation or exercise of market power. The implicit
asymmetry principle has important systemic effects for merger control. It
not only stands in the way of some socially desirable mergers but also may
indirectly facilitate the clearance of some socially undesirable mergers.
Neither system explicitly justifies this asymmetry, and none of the plausible
justifications are normatively supportable. The most likely positive expla-
nations for the asymmetry stem from institutional frictions between the
lawyer and economist classes in the antitrust agencies, self-preservationist
biases by antitrust regulators, and misplaced ideological opposition to in-
dustrial concentration. In principle, the probability-adjusted net present
value of merger risks should be treated symmetrically with the probability-
adjusted net present value of merger efficiencies.
Table of Contents
Introduction ...................................................................................... 348
I. Merger Efficiencies Legal Malaise................................. 351
A. The Predictive Context of Merger Decisions ..................... 351
B. U.S. Legal Principles ......................................................... 355
C. EU Legal Principles .......................................................... 358
II. Systemic Effects of Formal Asymmetry ........................... 360
A. Incidence, Intensity, and Effect of Efficiencies
Discourse in Administrative Negotiations ......................... 360
B. The Liberalization of Merger Policy .................................. 364
C. Effects on Distribution of Proposed and
Challenged Mergers .......................................................... 368
III. Sources of Hostility to Merger Efficiencies .................. 370
A. Productive Efficiencies Do Not Always
Benefit Consumers ............................................................. 371
B. Efficiencies Claims Are Difficult to Prove ......................... 374

* Professor of Law, University of Michigan. Earlier drafts of this Article were pre-
sented at workshops at the Swiss Federal Institute of Technology Zurich, the University of
East Anglia, and the University of Michigan. This Article grew out of a joint submission to the
Justice Department and Federal Trade Commission with Joe Simons. Malcolm Coate, Bob
Lande, Joe Simons, Danny Sokol, and Larry Fullerton provided helpful comments on an earli-
er draft. Caroline Flynn provided excellent research assistance. All mistakes are, of course, my
own.
Crane FTP3 B.doc 10/28/2011 10:34 AM
348 Michigan Law Review [Vol. 110:347
C. Mergers Are Driven by Kingdom Building
Rather Than Increasing Shareholder Value ....................... 376
D. Counterattacking Optimism Bias ...................................... 377
E. Efficiencies Create Undue Dominance .............................. 379
F. Status Quo Preference ....................................................... 381
1. Loss Aversion .............................................................. 381
2. Precautionary Principle ............................................... 382
3. Deconcentration as a Political Value ........................... 384
IV. Revaluing Merger Efficiencies ......................................... 386
A. Standards of Proof and Burdens of Proof .......................... 387
B. Balancing and Problems of Commensurability ................. 388
C. Costs of Increased Complexity .......................................... 389
Conclusion ......................................................................................... 390
Introduction
Merger law exhibits an unexplained and unexamined differentiation
between probabilistic costs and benefits.
1
In the two leading merger
systemsthose of the United States and the European Unionmerger law
implicitly requires a greater degree of predictive proof of merger-generated
efficiencies than it does of merger-generated social costs. As a matter of
both verbal formulation in the governing legal norms and observed practice
of antitrust enforcement agencies and courts, the government is accorded
greater evidentiary leniency in proving anticompetitive effects than the
merging parties are in proving offsetting efficiencies.
To illustrate, suppose that the best available economic evidence holds
that a horizontal merger is 40 percent likely to create $100 in net present
value consumer welfare losses and 40 percent likely to create $100 in net

1. The voluminous academic literature on merger efficiencies includes the following
articles: Mark N. Berry, Efficiencies and Horizontal Mergers: In Search of a Defense, 33 San
Diego L. Rev. 515 (1996); Malcolm B. Coate, Efficiencies in Merger Analysis: An Institu-
tionalist View, 13 Sup. Ct. Econ. Rev. 189 (2005); Alan A. Fisher & Robert H. Lande,
Efficiency Considerations in Merger Enforcement, 71 Calif. L. Rev. 1580 (1983); Raymond
Jackson, The Consideration of Economies in Merger Cases, 43 J. Bus. 439 (1970); Joseph
Kattan, Efficiencies and Merger Analysis, 62 Antitrust L.J. 513 (1994); William J. Kolasky
& Andrew R. Dick, The Merger Guidelines and the Integration of Efficiencies into Antitrust
Review of Horizontal Mergers, 71 Antitrust L.J. 207 (2003); Jamie Henikoff Moffitt, Merg-
ing in the Shadow of the Law: The Case for Consistent Judicial Efficiency Analysis, 63 Vand.
L. Rev. 1697 (2010); Timothy J. Muris, The Government and Merger Efficiencies: Still Hos-
tile After All These Years, 7 Geo. Mason L. Rev. 729 (1999); Robert Pitofsky, Efficiency
Consideration and Merger Enforcement: Comparison of U.S. and EU Approaches, 30 Ford-
ham Intl L.J. 1413 (2007) [hereinafter Pitofsky, Efficiency Consideration]; Robert Pitofsky,
Efficiencies in Defense of Mergers: Two Years After, 7 Geo. Mason L. Rev. 485 (1999); An
Renckens, Welfare Standards, Substantive Tests, and Efficiency Considerations in Merger
Policy: Defining the Efficiency Defense, 3 J. Competition L. & Econ. 149 (2007); and Greg-
ory J. Werden, An Economic Perspective on the Analysis of Merger Efficiencies, Antitrust,
Summer 1997, at 12.
Crane FTP3 B.doc 10/28/2011 10:34 AM
December 2011] Rethinking Merger Efficiencies 349
present value efficiencies that would be passed on to consumers.
2
Putting
aside enforcement costs, the expected value of the merger to consumers is
zero. Therefore, all else being equal, there is no reason to challenge the
merger, particularly given the high costs of enforcement. Under prevailing
norms and practices, however, the merger would likely be challenged. Su-
perficially, at least, the articulated legal mechanism for this differentiation
would be a disparity in the standards of proof for the governments affirma-
tive case and the defendants rebuttal case.
The systemic consequences of this asymmetry are significant, in a way
that has not previously been appreciated. It might appear that the only con-
sequence of a more stringent approach to claims of merger efficiencies is
that some mergers that are close calls on the anticompetitive effects side of
the ledger will be prohibited even though, on balance, they might actually
benefit society. Since merger policy has been relatively lenient overall in the
past three decades, false positives in a handful of close-call merger cases
might seem to be a relatively trivial consequence of an unexplained eviden-
tiary asymmetry.
This view incorrectly assumes that the only consequence of stringency
on proof of efficiencies falls on the efficiencies side of the ledger. There are
good reasons to think that this is not truethat courts and agencies selec-
tively compensate for not giving much weight to merger efficiencies claims
by demanding too much proof of anticompetitive effects from government
antitrust enforcers. In an alternative legal regime where efficiencies and
risks were equally weighted and parties therefore had a greater incentive to
come forward with evidence of efficiencies, some mergers that today pro-
ceed unchallenged might be challenged since courts and enforcers could
become more credulous of anticompetitive effects theories in cases without
plausible efficiencies claims. Rebalancing the weighting of efficiencies and
anticompetitive effects could have a significant effect on the overall mix and
distribution of merger challenges.
This Article interrogates the differential treatment of costs and benefits
and argues that it is unjustified and counterproductive. A potential merger
efficiency should be given weight equal to an equally likely anticompetitive
risk of the same magnitude. To put it more formally, the probability-adjusted
net present value of merger risks should be treated symmetrically with the
probability-adjusted net present value of merger efficiencies.
This proposition may seem intuitively obvious given ordinary cost-
benefit analysis principles, but there are a number of reasons why symmet-
rical weighting might not hold in the merger context. Merger efficiencies
might be disfavored because they tend to be captured by producers rather

2. The efficiencies and harms of mergers are almost always predicted ex ante, because
most jurisdictions that prohibit anticompetitive mergers, including the United States and the
European Union, require premerger notification and clearance of most categories of potential-
ly troubling mergers. Hence, the merger review function occurs before actual harms or
efficiencies are known. See infra Section I.A.
Crane FTP3 B.doc 10/28/2011 10:34 AM
than consumers, while the consumers bear the full weight of anticompetitive
effects. Similarly, short-run efficiencies may be disfavored because they can
create long-run market dominance that creates further inefficiencies as the
merging firms eventually exercise market power. Efficiencies claims may
also be treated with skepticism because, unlike anticompetitive effects theo-
ries, efficiencies theories are inherently speculative. Finally, such claims
may be suspect because of a general view that large corporate mergers are
more often the product of kingdom building by imperialistic CEOs than ef-
forts to generate shareholder value, or that managers proposing mergers
suffer, as a class, from optimism bias.
Merger efficiencies may also be running up against the expression of po-
litical or ideological values in merger policy. Efficiency doctrine and
practice may express residual manifestations of the precautionary principle,
a requirement that proponents of economic changes eliminate the possibility
of social welfare losses before those changes are approved. Or the veiled
antipathy to merger efficiencies may be a holding place for ideological re-
sistance to large aggregations of economic power, even when those
aggregations advance short-run consumer interests.
This Article interrogates and rejects each of these possible justifications
for cost-benefit asymmetry. It argues in favor of a formal principle of sym-
metrical treatment of expected costs and benefits from future mergers.
However, treating costs and benefits symmetrically does not necessarily en-
tail a comprehensive overhaul in the way that merger efficiencies are
considered or the weight they are given in merger review. Courts and agen-
cies sometimes discount certain efficiency claims for justifiable reasons.
Some efficiency claims are inherently speculative or unlikely to advance
consumer welfare. Rather, adoption of the symmetry principle would add
rigor and transparency to merger review and reveal circumstances where
well-founded efficiency defenses may be subordinated to confused analysis
or weakly articulated policy objections.
Part I of this Article sets the stage by describing the prospective context
of merger review decisions, which require agencies and sometimes courts to
make predictive assessments of the consequences of mergers that have not
yet occurred. It then describes the asymmetrical treatment between merger
costs and benefits as a positive matter in the law and practice of United
States and European antitrust agencies and courts. Although these two lead-
ing and often competing merger control jurisdictions differ in many ways on
the substance and institutional framework of merger review, they share a
common and unexplained devaluation of merger efficiencies as compared to
their treatment of predicted anticompetitive merger costs.
Part II analyzes the systemic consequences of the understood norm of
agency and court discounting of merger efficiency arguments. While this
phenomenon has generally been viewed just to stand in the way of some
mergers potentially beneficial to society, the asymmetry principle may in
fact result in an overall suboptimal mix of approved and disapproved mer-
gers, since the principle tends to create a suboptimal amount of information
Crane FTP3 B.doc 10/28/2011 10:34 AM
that would be useful in predicting and evaluating both efficiencies and anti-
competitive effects.
Parts III and IV consider the current regime and offer a new merger re-
view framework. Part III identifies a number of possible grounds for
asymmetrical treatment and rejects each one as normatively insufficient to
justify a principle of asymmetry. Part IV proposes a path forward for more
fluid integration of efficiency concerns in merger review. It considers the
role that burdens of proof should play on efficiencies questions. It also
acknowledges that a principle of symmetrical treatment cannot be applied in
a numerically rigid way but rather should serve as a mnemonic device to
stimulate a rebalancing in some key drivers of merger policy. Finally, it con-
siders the additional complexity costs that a symmetry principle might
entail.
I. Merger Efficiencies Legal Malaise
A. The Predictive Context of Merger Decisions
Unlike adjudicatory decisionmaking, which usually involves recon-
structing past facts and sorting through their legal implications, regulatory
decisionmaking inherently involves predictions about the future.
3
When the
Food and Drug Administration (FDA) decides whether to allow the mar-
keting of a new drug, the Environmental Protection Agency (EPA)
determines whether to allow a new pesticide, or the National Highway Traf-
fic Safety Administration (NHTSA) adopts rules for new automobile
safety features, the agency must make predictions about the respective costs
and benefits of the innovations.
4
Still, even in these regulatory contexts
where future paths and not past conduct are in question, the agencies usually
can base their decisions on a sampling of information reflecting the innova-
tions properties. The FDA can review clinical trials,
5
the EPA can order
testing of the pesticides,
6
and the NHTSA can simulate the robustness of the
safety devices in crash tests.
7
The predictions are thus extrapolations from
controlled experiments to real world interactions.

3. See generally Michael Abramowicz, Predictive Decisionmaking, 92 Va. L. Rev. 69
(2006).
4. See generally Richard L. Revesz & Michael A. Livermore, Retaking Ration-
ality: How Cost-Benefit Analysis Can Better Protect the Environment and Our
Health (2008).
5. See Running Clinical Trials, U.S. Food & Drug Admin., http://www.fda.gov/
ScienceResearch/SpecialTopics/RunningClinicalTrials/default.htm (last visited Aug. 29, 2011)
(explaining the regulatory framework for running clinical trials).
6. See generally 7 U.S.C. 136136y (2006) (codifying the EPAs regulatory author-
ity over pesticides).
7. See William T. Hollowell et al., Natl Highway Traffic Safety Admin.,
Updated Review of Potential Test Procedures for FMVSS No. 208 (1999),
Crane FTP3 B.doc 10/28/2011 10:34 AM
By contrast, most modern merger review requires predictions about the
likely consequences of an event that has not yet occurred and that cannot be
sampled, studied, or tested. With few exceptions, merger challenges occur
before mergers have closed. In the United States, this is due to the Hart-
Scott-Rodino Act of 1976, which requires parties making stock or asset
acquisitions that meet certain dollar thresholds to file a premerger notifica-
tion document with both the Federal Trade Commission (FTC) and the
Department of Justice (DOJ).
8
The parties may not close the merger
transaction until thirty days after filing the premerger notification.
9
If prior
to the close of the thirty days whichever agency is handling the case has
concerns about the transaction, it can file a dreaded second request for
information.
10
The parties are then prohibited to close the merger until certi-
fying substantial completion of the second request,
11
a process that can take
upwards of six months.
12
Because most mergers are time sensitive, parties
have strong incentives to seek resolution with the agencies by restructuring
their deals to assuage any competitive concerns or else to abandon the deals
rather than to litigate.
13

The European Union follows an even stricter premerger clearance sys-
tem. Subject to various technical exceptions, parties to a merger must file a
premerger notification form and await a final decision by the European
Commission (the Commission or EC) before closing the transaction.
14

The review can take up to 105 days.
15
If the Commission chooses to prohibit
a merger, the parties must then seek annulment of the Commission decision
in the European General Court, a process that can take over a year even on a

available at http://www.nhtsa.gov/DOT/NHTSA/NRD/Multimedia/PDFs/Crashworthiness/
Air%20Bags/FMVSS_ 208_II.pdf (describing frontal crash test procedures).
8. 15 U.S.C. 18a (2006).
9. Id.
10. Id. 18a(e).
11. See id. (discussing the second-request waiting period).
12. See Maurice E. Stucke, Does the Rule of Reason Violate the Rule of Law?, 42 U.C.
Davis L. Rev. 1375, 1462 n.382 (2009) (collecting various estimates on time and expense to
comply with second request).
13. See Joe Sims & Deborah P. Herman, The Effect of Twenty Years of Hart-Scott-
Rodino on Merger Practice: A Case Study in the Law of Unintended Consequences Applied to
Antitrust Legislation, 65 Antitrust L.J. 865, 881 (1997) (noting that the FTC and DOJ have
essentially create[d] the automatic stay of a transaction that the 94th Congress explicitly
refused to grant); see also Edward T. Swaine, Competition, Not Competitors, nor Canards:
Ways of Criticizing the Commission, 23 U. Pa. J. Intl Econ. L. 597, 632 (2002) (arguing
that American companies might be slow to characterize the HSR process as one susceptible
to judicial oversight because [v]oluminous Second Requests act as de facto injunctions).
14. Eleanor M. Fox & Daniel A. Crane, Global Issues in Antitrust and Com-
petition Law 451 (2010).
15. European Commn, EU Competition Law: Rules Applicable to Merger
Control 4 (2010), available at http://ec.europa.eu/competition/mergers/legislation/
merger_compilation.pdf.
Crane FTP3 B.doc 10/28/2011 10:34 AM
fast track.
16
As in the United States, most firms abandon or restructure
deals that the Commission challenges rather than choosing to litigate.
17

Further, antitrust principles prohibit gun jumping, any preclosing inte-
gration or coordination of the firms on such matters as price and output.
18

The upshot is that in the horizontal cases, which are by far the largest set of
challenged merger cases,
19
the firms must continue to behave as arms-
length competitors during the time period when the potential anticompeti-
tive effects of their proposed merger are under evaluation. Thus, on neither
the predictive anticompetitive effects side nor the predictive efficiencies side
do the agencies have sample data from which they can extrapolate results
before they must make their decision.
In evaluating likely anticompetitive effects, the agencies generally con-
sider one of two kinds of theoriescoordinated interaction and unilateral
effects. In some markets, they consider the possibility that the merger will
increase concentration to the point that tacit or explicit collusion (such as
price fixing or market division) among the remaining firms in the market
would be facilitated.
20
These coordinated interaction theories tend to de-
pend heavily on structural assumptionsfor example, that concentration
levels above a certain Herfindahl Hirschman Index (HHI) in markets
characterized by certain features (for example, high fungibility of goods,
transparency of pricing, entry barriers, strong mechanisms for detecting
price cutting, and a history of past collusion) tend to result in increased op-
portunities to collude.
21

16. See John Davies & Robert Schlossberg, Judicial Review of Antitrust Agency Merger
Clearance Decisions, Antitrust, Fall 2006, at 17, 2122 (2006) (describing the European
fast-track judicial review procedure which can take seven to nineteen months as compared
to an average of thirty-one months for cases not on a fast track).
17. The European Commission rarely reaches a prohibition decision in merger cases
since most questionable mergers are resolved by the merging parties making commitments
that resolve any competitive concerns. The Commissions statistics show that the Commission
only reached twenty-one prohibition decisions over the twenty-year period from 1990 to 2010.
Directorate Gen. of Competition, European Commn, Merger Statistics (June 30, 2011) [here-
inafter Merger Statistics], http://ec.europa.eu/competition/mergers/statistics.pdf. In the same
period, it allowed ninety-three mergers with commitments. Id.
18. Kathryn M. Fenton & Erin M. Fishman, M&A Transaction Planning: Premerger
Coordination, Gun Jumping, and Other Related Issues, in Mergers and Acquisitions 2006:
What You Need to Know Now 245, 247 (PLI Corp. Law & Practice, Course Handbook Ser.
No. 10160, 2006).
19. See U.S. Dept of Justice & FTC, Horizontal Merger Guidelines 7 (rev.
2010) [hereinafter HMG 2010], available at http://www.justice.gov/atr/public/guidelines/
hmg-2010.pdf. See generally James Langenfeld, Non-Horizontal Merger Guidelines in the
United States and the European Commission: Time for the United States to Catch Up?, 16
Geo. Mason L. Rev. 851, 851 (2009) (reporting that there have been relatively few nonhori-
zontal merger challenges in the United States in recent years).
20. HMG 2010, supra note 19, 7.1.
21. See id. 7.2 (discussing these factors under the heading Evidence a Market is
Vulnerable to Coordinated Conduct).
Crane FTP3 B.doc 10/28/2011 10:34 AM
In other marketsparticularly differentiated goods marketscollusion
is less likely to result even with increases in concentration, and the agencies
tend to focus on the possibility that the merger would allow the merging
parties to increase price or reduce quality even without tacit or explicit col-
lusion.
22
In these cases, the agencies apply a unilateral effects theory to
determine whether the merged firms would be able to increase prices or
decrease quality even without cooperation by the other firms in the market.
23

The key factor in such an analysis is whether consumers consider the prod-
ucts sold by the merging parties to be each others best substitutes
meaning that customers tend to substitute preferentially between the goods
or services of the merging parties.
24
Critical to these types of analyses are
the diversion ratios between the two firms products.
25
The agencies also pay
close attention to the possibility of price discrimination against vulnerable
populations of customers, which a merger may facilitate even if it does not
permit price increases to the market as a whole.
26

The sources of information that the agencies consider in deploying the
coordinated interaction and unilateral effects models vary by the type of
case. Increasingly, the agencies place priority on experience with similar
cases.
27
Where the necessary market share and demand elasticity data are
available, economists in the agencies may run merger simulations to esti-
mate the price effects resulting from the merger,
28
although simulation
models may be more important in theory than in practice.
29

Fewer than 5 percent of all mergers scrutinized by the antitrust agencies
in the United States and the European Union give rise to competitive con-
cerns.
30
Weighing against concerns about anticompetitive effects are

22. Id. 6. See generally David Scheffman & Joseph Simons, Unilateral Effects for
Differentiated Products: Theory, Assumptions, and Research, Antitrust Source, Apr. 2010,
at 1 (discussing the agencies approach to unilateral effects in differentiated product markets).
23. HMG 2010, supra note 19, 6.1.
24. Id.
25. Id. A diversion ratio is the fraction of unit sales lost by the first product due to an
increase in its price that would be diverted to the second product. Id.
26. Id. 3.
27. Id. 2.1.2.
28. See, e.g., Philip Crooke et al., Effects of Assumed Demand Form on Simulated
Postmerger Equilibria, 15 Rev. Indus. Org. 205 (1999); Roy J. Epstein & Daniel L. Rubin-
feld, Merger Simulation: A Simplified Approach with New Applications, 69 Antitrust L.J.
883 (2001); Kai Hschelrath, Detection of Anticompetitive Horizontal Mergers, 5 J. Competi-
tion L. & Econ. 683, 694 (2009).
29. See Malcolm B. Coate & Jeffrey H. Fischer, A Practical Guide to the Hypothetical
Monopolist Test for Market Definition, 4 J. Competition L. & Econ. 1031 (2008) (arguing
that simulation models are based on assumptions making them poor predictors of actual price
effects).
30. Pitofsky reported an estimate of less than 5% in 2007. Pitofsky, Efficiency Consid-
eration, supra note 1, at 1413. More recent data suggest that the number may be smaller.
Sokol and Fishkin report total Hart-Scott-Rodino filings and second requests for the period
20052010. During that period, second requests were issued in 2.3% (2008) to 4.3% (2009) of
Crane FTP3 B.doc 10/28/2011 10:34 AM
potential efficiencies from the merger. Generically, merger efficiencies can
include economies of scale or scope, technological complementarity, re-
duced transportation or other distribution costs, reduced capital costs,
product line specialization, the deployment of scarce managerial talent
across a wider portfolio of assets, and positive innovation effects due to the
combination of research and development laboratories or intellectual proper-
ty portfolios.
31
To a large extent, predictions about these efficiencies depend
less on models and more on fact-specific data than is true on the anticompet-
itive effects side of the ledger.
The upshot is that merger control is an inherently predictive exercise.
While the quality of models and data concerning proposed mergers varies
by issue, merger law is inherently about divining future industrial paths in
light of the exogenous shock of firm integration. It is for this reason that
probability principles play such an important role in steering the contours of
merger review.
B. U.S. Legal Principles
Section 7 of the Clayton Act, as modified by the 1950 Celler-Kefauver
Amendments, forms the substantive bedrock of U.S. merger policy. Its terse
textwhich prohibits mergers and asset acquisitions whose effect may be
substantially to lessen competition
32
makes no reference either to a
threshold of probability for a finding of anticompetitive effects or to any
possibility of an efficiencies defense.
In explicating the text of section 7, the Supreme Court has read the word
may as providing some indication of the threshold of proof necessary for
a finding that a merger is predictively anticompetitive. In oft-repeated dicta
from its 1962 opinion in Brown Shoe Co. v. United States, the Court ob-
served that Congress used the words may be substantially to lessen
competition . . . to indicate that its concern was with probabilities, not cer-
tainties.
33
Reflecting on Celler-Kefauvers legislative history, the Court
noted that [s]tatutes existed for dealing with clear-cut menaces to competi-
tion; no statute was sought for dealing with ephemeral possibilities,
34
thus
suggesting that the threshold of necessary probability lies somewhere be-
tween the clear-cut and the ephemeral. Summing up the threshold of
probability question, the Court concluded that [m]ergers with a probable
anticompetitive effect were to be proscribed by this Act.
35

all Hart-Scott-Rodino filings. D. Daniel Sokol & James A. Fishkin, Response, Antitrust Mer-
ger Efficiencies in the Shadow of the Law, 64 Vand. L. Rev. En Banc 45, 48 (2011).
31. Fisher & Lande, supra note 1, at 1599; see also Patrick A. Gaughan, Mergers,
Acquisitions, and Corporate Restructurings 12580 (5th ed. 2011) (outlining motiva-
tions for mergers and acquisitions).
32. 15 U.S.C. 18 (2006).
33. 370 U.S. 294, 323 (1962).
34. Brown Shoe, 370 U.S. at 323.
35. Id.
Crane FTP3 B.doc 10/28/2011 10:34 AM
The elliptical use of probable evokes a commonly used, if not precisely
defined, threshold in the hierarchy of U.S. legal probabilityprobable cause,
which is the quantum of probability necessary for the issuance of a search
warrant under the Fourth Amendment. The Supreme Court has
denied that probable cause is susceptible of precise definition or quantifica-
tion into percentages,
36
but practitioners and commentators often
understand it to lie in the 4045 percent range.
37
A survey of federal judges
found an average percentage of 46 percent for probable cause.
38
In any
event, the Supreme Courts repeated invocation of probability as the rele-
vant threshold of proof for merger harms suggests that the governments
burden in seeking to enjoin a merger is less than a preponderance of the evi-
dence.
Complicating this assessment is the fact that most litigated merger pro-
ceedings are decided on preliminary injunctions rather than trials on the
merits.
39
In typical preliminary injunction proceedings, the plaintiff needs to
establish a substantial likelihood of success on the merits, a threshold
higher than probable cause and probably higher than a preponderance of the
evidence.
40
But since the ultimate standard of proof is probability, not pre-
ponderance, the governments effective burden is merely to prove a
substantial likelihood that it will eventually be able to show probable
cause to block the mergera combination that seems to make the govern-
ments burden shrink exponentially. Further, when the FTC sues for a
preliminary injunction to block a merger so that it may conduct a full ad-
ministrative review of the merger, courts have held that the FTC need only
raise serious, substantial, difficult, and doubtful issues about the merger.
41

This seems to collapse the necessary threshold of probability on anticompet-
itive effects even further.
This bias in favor of harms over efficiencies is reflected in the text of the
Horizontal Merger Guidelines (the Guidelines).
42
The Guidelines implicit-
ly treat efficiencies and anticompetitive risks asymmetrically by insisting
that efficiencies be proven to a very high degree of certainty in order to jus-

36. Maryland v. Pringle, 540 U.S. 366, 371 (2003).
37. See, e.g., Lawrence Rosenthal, The Crime Drop and the Fourth Amendment: To-
ward an Empirical Jurisprudence of Search and Seizure, 29 N.Y.U. Rev. L. & Soc. Change
641, 680 (2005) (reporting that a newly minted assistant United States attorney was informed
by his supervisor that probable cause meant 40 percent).
38. C.M.A. McCauliff, Burdens of Proof: Degrees of Belief, Quanta of Evidence, or
Constitutional Guarantees?, 35 Vand. L. Rev. 1293, 1325 (1982).
39. See Moffitt, supra note 1, at 1710 (analyzing preliminary injunction decisions from
the past twenty-five years).
40. See, e.g., United States v. Melrose E. Subdivision, 357 F.3d 493, 504 (5th Cir. 2004)
(observing that a substantial likelihood of success on the merits is presumably a higher stand-
ard than probable cause).
41. FTC v. Whole Foods Mkt., Inc., 548 F.3d 1028, 1035 (D.C. Cir. 2008) (quoting
FTC v. H.J. Heinz, 246 F.3d 708, 71415 (D.C. Cir. 2001)).
42. The Horizontal Merger Guidelines were substantially overhauled in 2010.
Crane FTP3 B.doc 10/28/2011 10:34 AM
tify a merger whereas risks need not be proven with great certainty in order
to block a merger.
43
In order to find anticompetitive effects, the Guidelines
require only reliable evidence about the likely effects of a merger.
44
On
the other hand, the Guidelines project an attitude of suspicion at the least,
and hostility at the most, toward efficiencies claims. They note that
[e]fficiencies are difficult to verify and quantify, in part because much of
the information relating to efficiencies is uniquely in the possession of the
merging firms. Moreover, efficiencies projected reasonably and in good faith
by the merging firms may not be realized. Because of these difficulties of
proof, the agencies impose the following requirements on the merging par-
ties:
[T]he merging firms [must] substantiate efficiency claims so that the Agen-
cies can verify by reasonable means the likelihood and magnitude of each
asserted efficiency, how and when each would be achieved (and any costs
of doing so), how each would enhance the merged firms ability and incen-
tive to compete, and why each would be merger-specific.
45

They then go on to warn that [e]fficiency claims will not be considered if
they are vague, speculative, or otherwise cannot be verified by reasonable
means, and that [p]rojections of efficiencies may be viewed with skepti-
cism, particularly when generated outside of the usual business planning
process.
46
The Guidelines then explicitly state that the agencies will not
give equal weight to efficiencies and harms: In conducting this analysis, the
Agencies will not simply compare the magnitude of the cognizable efficien-
cies with the magnitude of the likely harm to competition absent the
efficiencies.
47
The Guidelines then suggest a sliding scale approach where
the magnitude and degree of proof necessary for relying on offsetting

43. The same was true under the recently replaced 1992 Guidelines. Thus, for example,
section 1 of the 1992 Guidelines explained that the overall analysis was focused on whether
firms likely would take certain actions given their economic interests. There was no re-
quirement to verify that the firms actually would raise prices post merger, just that doing so
would be consistent with a rational actor model. On the other hand, section 4 sternly warned
that efficiencies defenses were not to be made lightly. Efficiencies could not just be predicted;
they had to be verified through empirical evidence. When potential adverse competitive effects
were expected to be large, verified efficiencies had to be extraordinarily great. U.S. Dept
of Justice & FTC, Horizontal Merger Guidelines (rev. ed. 1997) [hereinafter HMG
1997], available at http://www.justice.gov/atr/public/guidelines/hmg.htm.
44. HMG 2010, supra note 19, 2.2.1.
45. Id. 10.
46. Id.; see also U.S. Dept of Justice & FTC, Commentary on the Horizontal
Merger Guidelines 52 (2006) [hereinafter Commentary on HMG], available at
http://www.justice.gov/atr/public/guidelines/215247.pdf (Efficiency claims that are vague,
speculative, or unquantifiable and, therefore, cannot be verified by reasonable means, are not
credited.).
47. HMG 2010, supra note 19, 10.
Crane FTP3 B.doc 10/28/2011 10:34 AM
efficiencies increases exponentially with the quantity of predicted anticom-
petitive effects.
48

The asymmetrical treatment between expected harms and efficiencies is
not merely a function of parsing the Guidelines text. Despite some greater
sympathy toward efficiencies in recent years, practitioners report that the
agencies usually react with coolness to efficiencies arguments.
49

C. EU Legal Principles
EU merger law derives from the EC Merger Regulation.
50
Unlike section
7 of the Clayton Act, paragraph 29 of the Merger Regulation specifically
recognizes efficiencies defenses.
51
Nonetheless, the scope of the efficiencies
defense and its correspondence with the threshold of proof necessary to
show predicted anticompetitive effects remain subject to some doubt.
52

Under EU case law, the Commission is accorded a margin of discre-
tion in making its predictions about anticompetitive effects from mergers.
53

The courts defer to Commission decisions so long as the evidence relied on
is factually accurate, reliable and consistent and the record contains all the
information which must be taken into account in order to assess a complex
situation and whether it is capable of substantiating the conclusions drawn
from it.
54
On the other hand, the merging parties bear the burden of proving
that efficiencies are likely to materialise and generally must use precise
and convincing evidence to do so.
55

The ECs horizontal merger guidelines place the burden of proving effi-
ciencies on the merging parties and require that the efficiencies claims be
verifiable such that the Commission can be reasonably certain that the effi-

48. Id.
49. See Muris, supra note 1, at 751 (Hostility reflects the long standing reluctance to
accept fully the cost-reducing potential of mergers.); see also Joseph J. Simons & Daniel A.
Crane, Comments to the Federal Trade Commission and Department of Justice An-
titrust Division, Unified Merger Analysis: Integrating Anticompetitive Effects
and Efficiencies, and Emphasizing First Principles (2009), available at
http://www.ftc.gov/os/comments/horizontalmergerguides/545095-00007.pdf; infra text ac-
companying notes 8086.
50. Council Regulation 139/2004, 2004 O.J. (L 24) 1 (EC).
51. Id. 29 (In order to determine the impact of a concentration on competition in the
common market, it is appropriate to take account of any substantiated and likely efficiencies
put forward by the undertakings concerned. It is possible that the efficiencies brought about by
the concentration counteract the effects on competition, and in particular the potential harm to
consumers, that it might otherwise have and that, as a consequence, the concentration would
not significantly impede effective competition, in the common market or in a substantial part
of it, in particular as a result of the creation or strengthening of a dominant position.).
52. See generally Fabienne Ilzkovitz & Roderick Meiklejohn, European Merger Con-
trol: Do We Need an Efficiency Defence?, 3 J. Industry, Competition, & Trade 57 (2003).
53. Case T-342/07, Ryanair v. Commn, 2010 E.C.R. ___, 147.
54. Id. 30.
55. Id. 406.
Crane FTP3 B.doc 10/28/2011 10:34 AM
ciencies are likely to materialise.
56
The nonhorizontal guidelines seem to
strike a softer tone on efficiencies, suggesting that expected efficiencies and
anticompetitive effects need to be weighed in the vertical and conglomerate
context.
57
However, they later repeat that proving efficiencies is the parties
burden and that the same criteria of verifiability as apply under the
horizontal guidelines apply to vertical and conglomerate mergers.
58
Read as
a whole, the nonhorizontal guidelines appear to suggest that the pro-
competitive effects of a merger should be subject to more exacting
evidentiary standards than theories of competitive harm.
59

As in the United States, European practitioners report that efficiencies de-
fenses are difficult to sustain in horizontal merger cases.
60
In vertical merger
cases, consistent with the softer approach in the guidelines, efficiencies de-
fenses have sometimes been accepted. For example, in the TomTom/Tele
Atlas merger, the Commission found that the vertical integration between a
map supplier and a maker of navigations systems would likely reduce prices
to consumers by a small amount since the vertically integrated firm would
eliminate double marginalization.
61
However, as in many other cases, the
efficiencies argument appears to have merely been the icing on the key find-
ingthat the merged firms would not have an incentive to behave
anticompetitively. It is unclear whether efficiencies concerns are doing sub-
stantial, independent work in European merger policy. At a minimum, EU

56. Guidelines on the Assessment of Horizontal Mergers Under the Council Regulation
on the Control of Concentrations Between Undertakings, 2004 O.J. (C 31) 5, 86 [hereinafter
EU Horizontal Merger Guidelines].
57. See Guidelines on the Assessment of Non-Horizontal Mergers Under the Council
Regulation on the Control of Concentrations Between Undertakings, 2008 O.J. (C 265) 6,
21.
58. Id. 5253.
59. Linklaters LLP & CRA Intl, The European Commissions Draft Guide-
lines on the Assessment of Non-Horizontal Mergers 4, available at http://ec.europa.eu/
competition/mergers/legislation/files_non_horizontal_consultation/linklaters.pdf. The Linklaters
and CRA International comment addressed the draft guidelines, but the Commission made no
modification to the text that would negate the comment.
60. See, e.g., Alexandros Papanikolaou & Michael Rosenthal, Merger Efficiencies
and Remedies, in The European Antitrust Review 2011 (2011), available at http://
www.globalcompetitionreview.com/reviews/28/sections/98/chapters/1083/merger-efficiencies-
remedies/ ([I]n practice, merging parties invoking the efficiency defence in horizontal mer-
gers are likely to continue to face an uphill battle with the Commission.); Robbert Snelders &
Simon Genevez, Merger Efficiencies and Remedies (2006), available at http://
www.cgsh.com/files/Publication/74073f21-9a08-4be3-a28b-6077c3d867eb/Presentation/
PublicationAttachment/7be91738-3d07-40f1-a4c7-61745c9a62f2/MC06-Chapter-2-Cleary-
Gottlieb.pdf (noting cases in which the Commissions approach to efficiencies has been ei-
ther ambiguous or outright hostile).
61. See Penelope Papandropoulos, Economist, The European Commission, Directorate
General of Competition, Address at the Third International Conference on Competition Law
and Policy: Non-Horizontal Mergers: Recent EC Cases 89 (May 29, 2009), available at
http://ec.europa.eu/dgs/competition/economist/non_horizontal_mergers.pdf.
Crane FTP3 B.doc 10/28/2011 10:34 AM
law and practice, like U.S. law and practice, treats probability-adjusted risks
and benefits asymmetrically in merger review.
II. Systemic Effects of Formal Asymmetry
The formal position of the antitrust enforcement agencies and courts in
the United States and the European Union is that merger efficiencies count
only weakly, if at all, toward sustaining the legality of questionable mergers.
The most obvious implication of this coolness toward efficiency claims is
that some mergers that would be cleared in a more efficiency-hospitable
jurisdiction would not be cleared in the United States and the European
Union. Under this assumption, a change in norms or practices resulting in a
more hospitable reception for efficiencies should result in a net increase in
the number of cleared mergersin other words, in a net liberalization of
merger policy.
But that conclusion may be unjustified. Solicitude for efficiencies may
already play a role in merger policy, but simply not at the level of individual
case analysis. Part of the movement toward liberalization of merger policy
in the last two or three decades may already reflect a commitment to allow-
ing efficient mergers without undertaking an individualized look at
efficiencies claims. A more particularized inquiry into merger efficiencies
might not result in a further net liberalization of merger policy but instead
only in a redistribution of the portfolios of permitted and prohibited mer-
gers.
To set the stage for an answer to these questions, this Part first surveys
the incidence and intensity of efficiencies discourse in merger negotiations
between the merging parties and the government agencies. It then provides a
snapshot of the overall liberalization of merger policy in the United States
and European Union in the past several decades. Finally, it considers the
systemic effects on the landscape of merger control that could follow from a
rebalancing of merger costs and benefits.
A. Incidence, Intensity, and Effect of Efficiencies Discourse
in Administrative Negotiations
Much of the academic writing on merger efficiencies assumes a deci-
sional model in which the antitrust agencies can exercise prosecutorial
discretion to not challenge questionable mergers because of efficiencies, but
courts usually serve as the ultimate arbiters of mergers legality.
62
Hence,
much of the scholarly work on merger efficiencies has focused on judicial
attitudes toward efficiencies.
63

62. See, e.g., Fisher & Lande, supra note 1; Kolasky & Dick, supra note 1, at 208 (dis-
cussing the role of efficiencies in judicial decisions regarding mergers); Moffitt, supra note 1.
63. See, e.g., Kolasky & Dick, supra note 1 (arguing that the article also shows the
influence the Guidelines have had on gaining judicial acceptance of the importance of effi-
Crane FTP3 B.doc 10/28/2011 10:34 AM
The available empirical work suggests that judges do purport to take ef-
ficiencies into account but that efficiencies actually play little role in merger
cases. In a recent empirical study of twenty-three U.S. merger cases litigated
between 1986 and 2009, Jamie Moffitt finds that [a]lthough courts claim to
be balancing merger-generated efficiencies with other negative factors af-
fecting market competition, they are actually making an assessment of the
relevant concentration in the applicable market and then allowing that initial
assessment to color their recognition of claimed efficiencies.
64
Courts may
thus be stampeding the efficiency factor based on their conclusions
regarding market concentration and possible anticompetitive effects.
65

But courts are no longer significant players in the formulation of U.S.
merger policy.
66
As noted in the previous Part, the Hart-Scott-Rodino Act
has pushed most merger control decisions into the agencies and away from
the courts.
67
For example, in 1983 when Fisher and Lande computed the
Type 3 costs of the greater complexities that an efficiencies defense would
entail, they estimated 20 to 25 litigated merger cases per year.
68
Their esti-
mates were based on averages from the last decade showing 9 FTC cases, 7
DOJ cases, and 5 private cases annually.
69
Since the early 1980s, however,
merger enforcement has moved increasingly in the direction of informal
administration without litigation.
70
Over the period from 1990 to 2009, the
FTC and the DOJ only litigated approximately 39 cases in court, fewer than
a net of 2 per year for both agencies.
71
For the last decade, 2000 through

ciencies in merger analysis); Moffitt, supra note 1 (examining twenty-five years of Section 7
Clayton Act cases in which efficiency claims were raised).
64. Moffitt, supra note 1, at 1698.
65. See Barton Beebe, An Empirical Study of the Multifactor Tests for Trademark In-
fringement, 94 Calif. L. Rev. 1581, 158182 (2006) (describing the tendency of courts in
trademark cases to stampede in multifactor analysis by using their decisions on a small
number of critical factors to determine the remaining factors).
66. See generally Sokol & Fishkin, supra note 30, at 47 (objecting to Moffitts focus on
litigated cases as failing to capture actual dynamics of merger control).
67. See supra text accompanying notes 813.
68. Fisher & Lande, supra note 1, at 1675.
69. Id. at 1675 n.312.
70. See generally Daniel A. Crane, Antitrust Antifederalism, 96 Calif. L. Rev. 1, 5157
(2008).
71. This estimate is drawn from a study of data compiled in the FTC and Department of
Justices Hart-Scott-Rodino Annual Report. See, e.g., U.S. Dept of Justice & FTC, Hart-
Scott-Rodino Annual Report: Fiscal Year 2010 (2010), available at http://www.ftc.gov/
os/2011/02/1101hsrreport.pdf. The FTC maintains a database of all thirty-three annual reports.
See Bureau of Competition: Annual Competition Enforcement Reports, FTC, http://
www.ftc.gov/bc/anncompreports.shtm (last visited Aug. 18, 2011) [hereinafter Annual Re-
ports] (covering the time period from 1977 to 2010). The estimate is based on the reported
number of cases in which the agencies filed a complaint in federal court and the court took
some action. In a much larger number of cases, the agencies filed for a preliminary or perma-
nent injunction and either the parties contemporaneously filed for a consent decree or the
merging parties abandoned the transaction without a judicial decision. See id.
Crane FTP3 B.doc 10/28/2011 10:34 AM
2009, only 15 merger cases were litigated.
72
Private antitrust challenges to
mergers are also relatively infrequent.
73

The same is true in the European Union. Litigation over merger cases
has become extremely infrequent. The European Commission has only pro-
hibited two mergers since 2002,
74
which means that most merger decisions
have been made through internal administrative processes. Since a brief
spurt of activity in 2002, the European courts have had little work to do on
merger policy.
The upshot is that most discussions of merger efficiencies take place in-
formally in nonpublic dialogue between the merger parties (or really, their
lawyers and hired economists) and the lawyers and economists in the anti-

72. Id. (synthesizing the relevant annual reports).
73. It is conventional wisdom that private section 7 challenges to mergers are rare. See,
e.g., Maurice E. Stucke, Behavioral Economists at the Gate: Antitrust in the Twenty-First
Century, 38 Loy. U. Chi. L.J. 513, 584 (2007) (Private parties rarely challenge mergers un-
der section 7 of the Clayton Act.). I am unaware, however, of any systematic study of private
section 7 challenges. A search of the Bloomberg docket database, which provides complete
coverage of federal court complaints beginning in 2005, yielded thirty-one private lawsuits
during the 20052010 period that appeared to raise section 7 challenges to corporate mergers
(as opposed to asset acquisitions). However, this count may overstate the magnitude of private
section 7 litigation, since several mergers yielded lawsuits by multiple plaintiffs in separate
actions. The thirty-one complaints in the following cases are on file with the author: Cassan
Enters., Inc. v. Hertz Global Holdings, Inc., Case No. 10-04289 (N.D. Cal. 2010); Malaney v.
Shell Oil Co., Case No. 10-02858 (N.D. Cal. 2010); Shred-it Am., Inc. v. MacNaughton, Case
No. 10-00547 (D. Haw. 2010); BanxCorp v. Apax Partners L.P., Case No. 10-04769 (D.N.J.
2010); BanxCorp v. Bankrate, Case No. 07-03398 (D.N.J. 2010); Sightline Payments, LLC v.
Global Cash Access Holdings, Inc., Case No. 10-00397 (D. Nev. 2010); Bonsignore v. Sirius
XM Radio Inc., Case No. 10-00526 (S.D.N.Y. 2010); Cassan Enters., Inc. v. Avis Budget Grp.,
Case No. 10-01934 (W.D. Wash. 2010); Golden Gate Pharmacy Servs., Inc. v. Pfizer, Inc.,
Case No. 09-03854 (N.D. Cal. 2009); Hart Intercivic, Inc. v. Diebold, Inc., Case No. 09-00678
(D. Del. 2009); AvMed, Inc. v. Sheridan Healthcorp, Inc., Case No. 09-23851 (S.D. Fla.
2009); Blessing v. Sirius XM Radio Inc., Case No. 09-10035 (S.D.N.Y. 2009); Cronin v. Siri-
us XM Radio Inc., Case No. 09-10468 (S.D.N.Y. 2009); Lahmeyer v. Evanston Nw.
Healthcare Corp., Case No. 08-02658 (N.D. Ill. 2008); Messner v. Evanston Nw. Healthcare
Corp., Case No. 08-02343 (E.D. Ill. 2008); Painters Dist. Council No. 30 Health & Welfare
Fund v. Evanston Nw. Healthcare Corp., Case No. 08-02541 (E.D. Ill. 2008); Natl Credit
Reporting Assn, Inc. v. Equifax, Inc., Case No. 08-02322 (D. Md. 2008); Ginsburg v. InBev
NV/SA, Case No. 08-01375 (E.D. Mo. 2008); Madani v. UAL Corp., Case No. 07-04296
(N.D. Cal. 2007); Reilly v. MediaNews Grp., Inc., Case No. 06-04332 (N.D. Cal. 2007); Por-
ter v. Evanston Nw. Healthcare Corp., Case No. 07-04446 (E.D. Ill. 2007); Delco LLC v.
Giant of Md. LLC, Case. No. 07-03522 (D.N.J. 2007); All Am. Mushroom, Inc. v. E. Mush-
room Mktg. Coop., Inc., Case. No. 06-01464 (E.D. Penn. 2006); Altman v. E. Mushroom
Mktg. Coop., Inc., Case. No. 06-00657 (E.D. Penn. 2006); Associated Grocers, Inc. v. E.
Mushroom Mktg. Coop., Inc., Case. No. 06-01854 (E.D. Penn. 2006); Diversified Foods &
Seasonings, Inc. v. E. Mushroom Mktg. Coop., Inc., Case No. 06-00638 (E.D. Penn. 2006);
Giant Eagle, Inc. v. E. Mushroom Mktg. Coop., Inc., Case No. 06-03523 (E.D. Penn. 2006);
M.L. Robert, II, L.L.C. v. E. Mushroom Mktg. Coop., Inc., Case No. 06-00861 (E.D. Penn.
2006); Port Dock & Stone Corp. v. Oldcastle Ne., Inc., Case No. 05-04294 (E.D.N.Y. 2005);
Miller Brewing Co. v. Molson Coors Brewing Co., Case No. 05-01307 (E.D. Wis. 2005);
Town of Norwood v. New Eng. Power Co., Case No. 97-10818 (D. Mass. 2000).
74. See Merger Statistics, supra note 17.
Crane FTP3 B.doc 10/28/2011 10:34 AM
trust enforcement agencies. To the extent that bargaining between the parties
and the government occurs, it occurs in the shadow of the law,
75
in the
sense that it is influenced by the parties expectations about judicial out-
comes should they litigate. In most cases, however, the laws shadow is
comparatively light, since most merging parties are unwilling to litigate in
court should the agency decide to oppose the merger.
76
The agencies mer-
ger guidelines set the stage for the administrative bargains, although the
guidelines are not legally binding
77
and their predictive power on agency
attitudes is not always strong.
78

Despite the prohibitive odds that efficiencies will make a difference in
most cases, merging parties usually go through the motions and make effi-
ciency arguments. A survey of 20 leading antitrust practitioners conducted
by Jon Baker and Carl Shapiro in 2007 revealed that the antitrust agencies
had become significantly more receptive to efficiencies claims than they
were a decade before.
79
Still, the data suggest that efficiencies arguments are
seldom dispositive, except perhaps in very close-call merger cases. A recent
study of 186 merger cases at the FTC found that internal staff memoranda
reported efficiencies claims in 147 out of 186 cases.
80
In the cases in which
the FTC staff reported the claimed dollar value of the claimed efficiencies,
the mean figures ranged from $191 million to $237 million depending on
the time period.
81
The claimed efficiencies represented an average of 8.1
percent of the transactions reported value.
82
Efficiencies claims did not
meet with particularly great success, at least in the FTCs Bureau of Compe-
tition (which is generally manned by lawyers). The Bureau of Competition

75. See Robert H. Mnookin & Lewis Kornhauser, Bargaining in the Shadow of the
Law: The Case of Divorce, 88 Yale L.J. 950, 978 (1979) (using the phrase in a different con-
text).
76. Robert Pitofsky, Proposals for Revised United States Merger Enforcement in a
Global Economy, 81 Geo. L.J. 195, 225 (1992); see also Crane, supra note 70, at 5157 (dis-
cussing the modern move away from litigating merger cases).
77. FTC v. H.J. Heinz Co., 246 F.3d 708, 716 n.9 (D.C. Cir. 2001) ([T]he Merger
Guidelines are not binding on the court.).
78. See Christine A. Varney, Assistant Atty Gen., Antitrust Div., Dept of Justice, An
Update on the Review of the Horizontal Merger Guidelines, Remarks as Prepared for the
Horizontal Merger Guidelines Review Projects Final Workshop 3 (Jan. 26, 2010), available
at http://www.justice.gov/atr/public/speeches/254577.pdf (A consistent theme running
through the panels is that there are indeed gaps between the Guidelines and actual agency
practicegaps in the sense of both omissions of important factors that help predict the com-
petitive effects of mergers and statements that are either misleading or inaccurate.).
79. Jonathan B. Baker & Carl Shapiro, Reinvigorating Horizontal Merger Enforcement,
in How the Chicago School Overshot the Mark: The Effect of Conservative Eco-
nomic Analysis on U.S. Antitrust 235, 25657 (Robert Pitofsky ed., 2008).
80. Malcolm B. Coate & Andrew J. Heimert, Merger Efficiencies at the Fed-
eral Trade Commission 19972007, at 67 (2009), available at http://www.ftc.gov/os/2009/
02/0902mergerefficiencies.pdf.
81. Id. at 12.
82. Id.
Crane FTP3 B.doc 10/28/2011 10:34 AM
discussed 342 efficiency claims (multiple efficiencies could be claimed in a
single transaction); it rejected 109, accepted 29, and offered no conclusion
on 204.
83
Efficiencies claims fared considerably better at the FTCs Bureau
of Economics (which is generally manned by economists), which consid-
ered 311 efficiencies claims; that bureau accepted 84, rejected 37, and made
no decision on 190.
84

Two factors are notable in these data. The first is the significant differ-
ence in perspective between the lawyer and economist classes in the
agenciesan issue to which this Article returns in Part III. The second is the
relative unimportance of efficiencies in merger analysis. The practice in the
antitrust agencies seems to be liberal invocation of efficiencies arguments by
the parties without a serious expectation of moving the agencies in most
cases. To the extent the agencies ultimately cite efficiencies considerations
in clearing mergers, antitrust practitioners report that they are often treated
as icing on the cake in cases where there are no serious concerns about
anticompetitive effects. As former FTC Chairman Tim Muris has observed,
Too often, the Agencies found no cognizable efficiencies when anti-
competitive effects were determined to be likely and seemed to recognize
efficiency only when no adverse effects were predicted.
85
As in the courts,
efficiencies discourse appears frequently in merger administration, but its
influence on overall merger policy seems to be weak.
B. The Liberalization of Merger Policy
Thus far, we have been considering the efficacy of efficiencies argu-
ments as independent factors in merger policy as though efficiencies and
anticompetitive effects were the credits and debits in a tidy system of dou-
ble-entry bookkeeping that only interacted when tallied at the bottom of the
page. But, in fact, perspectives on efficiencies can enter merger policy at a
variety of different points. A Bayesian prior belief that many mergers pro-
duce desirable efficiencies may push judges, legislators, or antitrust
enforcers to take a solicitous view of mergers as a general proposition, even
if they fail to credit case-specific efficiency arguments much of the time.
Indeed, one prevailing normative view is precisely thisthat legal sys-
tems should take into account merger efficiencies by articulating relatively
lenient merger standards across the board rather than trying to explore effi-
ciencies arguments on a case-by-case basis. In perhaps the most influential
article to make this point, Fisher and Lande argue against allowance of a
merger efficiency defense on a case-by-case basis on the ground that effi-
ciencies, although often present in mergers, are hard to detect on a case-
specific basis.
86
They also observe that allowing an efficiencies defense

83. Id. at 16.
84. Id. at 22.
85. Muris, supra note 1, at 731.
Crane FTP3 B.doc 10/28/2011 10:34 AM
would increase both Type 1 and Type 2 error costs and what they style Type
3 error coststhe increased costs to businesses, enforcers, and decision
makers from the increased complexity and unpredictability of an efficiencies
defense.
87
Instead of allowing an efficiencies defense on a case-by-case ba-
sis, Fisher and Lande would rais[e] the market-share thresholds of
presumptive illegality to account for potential efficiency gains, thus recog-
nizing an efficiency defense by liberalizing merger policy overall.
88

It may be the case that Fisher and Landes recommendation has been de
facto accepted in the last two decades. It is certainly the case that the U.S.
antitrust enforcement agencies have revised upward their presumptions on
the thresholds of market concentration necessary for horizontal mergers to
raise competitive concerns. Under the Horizontal Merger Guidelines in
place from 1992 to 2010, markets were considered unconcentrated if the
Herfindahl-Hirschman Index (HHI)
89
was below 1,000; moderately con-
centrated if it was between 1,000 and 1,800; and concentrated if it was
above 1,800.
90
Under the 2010 Guidelines, markets are considered uncon-
centrated if the HHI is below 1,500; moderately concentrated if it is between
1,500 and 2,500; and concentrated if it is over 2,500.
91
The agencies have
also raised the thresholds for the increase in concentration resulting from a
merger to raise competitive concerns.
92

One should be careful about reaching the conclusion that the antitrust
agencies have become generally more permissive with respect to mergers
based merely on this HHI inflation for at least two reasons. First, the con-
centration zones designated in the guidelines as raising competitive
concerns do not necessarily indicate serious trouble for mergers falling in
those zones. At least prior to the 2010 revisions (and we do not yet have data
for enforcement under the new Guidelines), many mergers that fell into the
Guidelines danger zones nonetheless passed agency scrutiny.
93
Hence, the
2010 revisions may be more reflective of past and ongoing liberality than
constitutive of new liberality. Second, concentration ratios have become less

87. Id. at 1670.
88. Id. at 1669.
89. The HHI index is computed by squaring the sums of the market shares of the mar-
ket participants. See HMG 2010, supra note 19, 5.3.
90. HMG 1997, supra note 43, 1.5.
91. HMG 2010, supra note 19, 5.3.
92. Under the 1992 Guidelines, an increase of over 100 in a highly concentrated market
created a presumption that the merger would create market power or facilitate its exercise.
HMG 1997, supra note 43, 1.5.1. Under the 2010 Guidelines, an increase of over 200 in
highly concentrated markets result in a presumption that the merger will create market power
or facilitate its exercise. HMG 2010, supra note 19, 5.3.
93. See FTC, Horizontal Merger Investigation Data, Fiscal Years 19962005
tbl. 3.1 (2007), available at http://www.ftc.gov/os/2007/01/P035603horizmergerinvestigation
data19962005.pdf (presenting data on the market concentration and increase in market con-
centration from horizontal mergers that the FTC investigated and either cleared or challenged).
Crane FTP3 B.doc 10/28/2011 10:34 AM
significant in merger analysis in the past two decades.
94
In large part, this is
a function of a shift in priority from coordinated interaction theories to uni-
lateral effects theories where concentration figures are less significant.
95

But these are quibbles with the evidentiary significance of the guidelines
revisions in demonstrating increasing merger liberality. Even if the liberali-
zation of concentration ratios does not alone signal an overall liberalization
of merger policy, there is little doubt that merger policy is far more liberal
today than it was twenty or thirty years ago.
96

Not only have the agencies relaxed their formal concentration criteria in
merger cases but the prospects for defendant victories in litigated cases have
improved dramatically in the last several decades as well. In his dissent in
United States v. Vons Grocery Co. in 1966, Justice Stewart could comment
sarcastically that [t]he sole consistency that I can find is that in litigation
under 7 [of the Clayton Act], the Government always wins.
97
Even as late
as the early 1980s, Fisher and Lande asserted that defendant merger victo-
ries not surprisingly have been relatively rare.
98
If anything, the trend in the
last decade has been toward defendant victories in litigated merger cases,

94. Under the 2010 Horizontal Merger Guidelines, it may no longer be necessary to
define a relevant market in every case. See HMG 2010, supra note 19, 4 (Some of the ana-
lytical tools used by the Agencies to assess competitive effects do not rely on market
definition . . . .). See generally Louis Kaplow, Why (Ever) Define Markets?, 124 Harv. L.
Rev. 437 (2010) (arguing that market definition is incoherent and unproductive in antitrust
cases).
95. See Carl Shapiro, The 2010 Horizontal Merger Guidelines: From Hedgehog to Fox
in Forty Years, 77 Antitrust L.J. 49, 54 (2010) (noting that [i]n recent years, more DOJ
investigations have involved unilateral effects than coordinated effects); see also Joseph Far-
rell & Carl Shapiro, Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to
Market Definition, B.E. J. Theoretical Econ., Jan. 2010, art. 9, 1 (arguing that a market
definition approach can be clumsy and inaccurate in industries with differentiated products
where the theory of harm is related to unilateral . . . effects). Part of the impetus for the shift
toward unilateral effects theories may reflect an overall shift in merger policing from homoge-
nous goods marketswhere markets are relatively easier to define, market shares are easier to
compute, and hence market concentration changes are easier to calculateto differentiated
goods or services markets where markets are difficult to define robustly, shares are difficult to
calculate robustly, and hence concentration indices are often close to meaningless.
This new focus on differentiated goods markets and unilateral effects theories may have
been driven in part by fundamental changes in the economy itself. As the economy has con-
tinued its evolution away from bricks and mortar and traditional manufacturing industries
toward information and technology industries, it has moved in the direction of differentiation
and heterogeneity of brands. See generally Carl Shapiro & Hal R. Varian, Information
Rules: A Strategic Guide to the Network Economy 2223 (1999) (describing charac-
teristics of information economies).
96. See generally D. Daniel Sokol, Antitrust, Institutions, and Merger Control, 17 Geo.
Mason L. Rev. 1055, 112829 (2010) (describing a survey of antitrust practitioners reporting
ambiguous views as to whether merger enforcement at the Justice Department was more leni-
ent in the Bush Administration than in the Clinton Administration and a uniform view that
merger review at the FTC was not more lenient under Bush than under Clinton).
97. 384 U.S. 270, 301 (1966) (Stewart, J., dissenting).
Crane FTP3 B.doc 10/28/2011 10:34 AM
with prominent government defeats in cases like United States v. Oracle
Corp. (Oracle-PeopleSoft)
99
and FTC v. Arch Coal, Inc.
100
During the
2000s, defendants won half of the preliminary injunction actions brought by
the FTC or the DOJ.
101
To the extent the shadow of the law plays a signifi-
cant role in the regulatory administration of mergers, merger control has
shifted in a decidedly promerger direction.
Although the European model of merger review is quite different from
the U.S. model, and European merger control is generally tighter than U.S.
merger control,
102
Europe has seen a similar trend toward a more active ju-
dicial role in questioning European Commission decisions prohibiting
mergers in the last decade. During the early 2000s in particular, the Europe-
an Court of Justice reversed the Commissions merger prohibition decisions
in a surprising string of cases that departed significantly from the courts
prior willingness to accord the Commission discretion in merger cases.
103

Since those decisions, the Commission seems to have become considerably
more cautious in its prohibition decisions, to the point that some academic
commentators and Commission officials wonder whether it has become too
lenient in merger enforcement.
104

There is no doubt that merger policy in both the United States and the
European Union is more liberal than it was three decades ago in the United
States or a decade and a half ago in Europe. What is impossible to say to
any great certainty is whether solicitude over merger efficiencies has signifi-
cantly influenced this trend. Whether or not it has, the comparatively liberal
state of merger policy today has implications for any reconsideration of the
asymmetrical treatment of merger anticompetitive risks and efficiencies.
Any movement toward greater consideration of merger efficiencies could
propel overall merger policy in a yet more lenient direction, which could in
turn induce political backlash against the overall trend in merger policy.
105

99. 331 F. Supp. 2d 1098 (N.D. Cal. 2004).
100. 329 F. Supp. 2d 109 (D.D.C. 2004).
101. According to the agencies joint Hart-Scott-Rodino Act annual reports, the agencies
won six preliminary injunction cases and lost six during the 20002009 period. See Annual
Reports, supra note 71.
102. See Mats A. Bergman et al., Comparing Merger Policies: The European Union
Versus the United States 2 (Potomac Papers L. & Econ., Working Paper No. 07-01, 2007) (on
file with the Michigan Law Review) (finding that European horizontal merger policy is gener-
ally more restrictive than U.S. merger policy in dominance cases).
103. See Francisco Todorov & Anthony Valcke, Judicial Review of Merger Control Deci-
sions in the European Union, 51 Antitrust Bull. 339, 340 (2006).
104. See Frank Maier-Rigaud & Kay Parplies, EU Merger Control Five Years After the
Introduction of the SIEC Test: What Explains the Drop in Enforcement Activity?, 30 Eur.
Competition L. Rev. 565, 57778 (2009).
105. Significantly, as a presidential candidate, then-Senator Barack Obama criticized the
Bush Administrations merger policy: Regrettably, the current administration has what may
be the weakest record of antitrust enforcement of any administration in the last half centu-
ry. . . . As president, I will direct my administration to reinvigorate antitrust enforcement. It
will step up review of merger activity and take effective action to stop or restructure those
Crane FTP3 B.doc 10/28/2011 10:34 AM
C. Effects on Distribution of Proposed and Challenged Mergers
The apparent implication of revaluing merger efficiencies relative to an-
ticompetitive effects is that courts and regulators would begin to permit
some number of marginal mergers that they previously would have disal-
lowed. To the extent the antitrust system is currently disallowing or
discouraging a significant number of beneficial mergers, a reorientation of
the relevant legal and administrative norms could result in net social welfare
improvement. Indeed, the mergers currently screened out by prevailing
norms may be precisely the most beneficial ones. Jamie Moffitt argues that
the courts hostility to merger efficiency defenses chills businesses willing-
ness to propose exactly those [deals] that have the greatest potential to
enhance competitionhigh-efficiency transactions in concentrated indus-
tries.
106

On the other hand, viewed as a proposal to liberalize merger policy, the
normative appeal of the symmetry principle seems to depend not merely on
its internal logic but also on some prior belief that contemporary merger
policy in the United States, the European Union, or other jurisdictions is
excessively restrictive. Since some commentators believe that U.S. merger
policy in particular has already become too permissive,
107
the mere internal
logic of the symmetry principle may seem an insufficient reason to recali-
brate merger policy in favor of even more liberal merger review.
But revaluing merger efficiencies relative to anticompetitive effects does
not require holding constant the rest of merger policy. Even without any
formal adjustment to other aspects of merger law, revaluing merger efficien-
cies could end up having no net effect on overall merger policy liberality.
Indeed, an explicit symmetry principle could induce legal decisionmakers to
give greater credence to anticompetitive effects theories in some cases than
they presently do. Several possible systemic reactions to an enhanced will-
ingness by agencies or courts to credit merger efficiencies arguments point
toward neutrality in overall merger leniency.
First, assuming that Fisher and Landes proposal to embed prior beliefs
about merger efficiencies in overall leniency toward mergers captures part of
the influence for merger liberalization in the last several decades, then a
higher valuation of efficiencies could alter courts and agencies overall
willingness to prohibit certain classes of mergers. Assuming that merger-
control institutions display an unconscious tendency to increase the

mergers that are likely to harm consumer welfare, while quickly clearing those that do not.
Senator Barack Obama, Statement for the American Antitrust Institute 2 (Sept. 27, 2007),
available at http://www.antitrustinstitute.org/files/aai-%20Presidential%20campaign%20-
%20Obama%209-07_092720071759.pdf.
106. Moffitt, supra note 1, at 174243.
107. See, e.g., Baker & Shapiro, supra note 79, at 256 (criticizing recent U.S. merger
enforcement as excessively lax); William E. Kovacic, Rating the Competition Agencies: What
Constitutes Good Performance?, 16 Geo. Mason L. Rev. 903, 915 (2009) (reporting that
commentators have called U.S. merger enforcement excessively lax).
Crane FTP3 B.doc 10/28/2011 10:34 AM
threshold of proof required for anticompetitive effects theories because they
are prohibited, culturally or legally, from giving significant weight to merger
efficiencies arguments, then a reversal of the norm on efficiencies could also
lead to a reversal of the norm on anticompetitive effects theories.
Second, alteration in the efficiencies norm could alter overall regulatory
or legal decisionmaking processes on mergers by affecting judges or regu-
lators assessments of the probability of anticompetitive effects.
Decisionmakers asked to assign a probability value to two related events
may anchor their determination of one events probability on their assess-
ment of the other events probability.
108
Judges or regulators asked to decide
on the absolute probability that a merger will produce anticompetitive ef-
fects might tend to lowball the probability because of a general skeptical
inclination as to proof of speculative future events but raise their estimate of
the probability of harms if asked to assess that probability at the same time
that they were assessing the probability of efficiencies.
One might object that if judges or regulators systematically raised their
estimates of future anticompetitive effects when faced with efficiencies de-
fenses, then merging parties would have diminished incentives to make
efficiencies claims in the first place. If that were to occur, the agencies might
respond by affirmatively insisting that the merging parties in close-call cases
provide the efficiencies justifications for their mergers. A related objection
focuses on net effects. If the only effect of adopting the symmetry principle
were that judges and regulators would become less skeptical of anticompeti-
tive effects claims, then the symmetrical treatment project would not result
in a true revaluation of merger efficiencies and, indeed, would seem point-
less. But even if revaluing efficiencies defenses did not lead to an overall
increase in the number of permitted mergers, it could still have a salutary
effect on the selection of mergers that are permitted and prohibited. In the
class of marginal merger casesthe class most likely to be affected by any
adjustment in legal principlethere might well be a socially beneficial in-
crease in permission for mergers creating net consumer (or social) benefits
and a corresponding decrease in mergers creating net consumer (or social)
harm.
Finally, it is possible that antitrust regulators have an exogenously de-
termined appetite for merger prohibition decisions, in effect a merger
quota that they need to fill regardless of the merits of individual merger
applications. Within a particular political and economic context, regulators
may approach merger control with a rough and perhaps unconscious sense
of the number of prohibition decisionsor, more generally, requirements
that parties restructure questionable dealsthey need to produce in order to
justify their budgetary allocations, show themselves to be sufficiently tough

108. See generally Amos Tversky & Daniel Kahneman, Judgment Under Uncertainty:
Heuristics and Biases, 185 Science 1124, 1128 (1974) (discussing the evaluation of probabil-
istic outcomes); Amos Tversky & Daniel Kahneman, Rational Choice and the Framing of
Decisions, 59 J. Bus. S251 (1986) (discussing probabilistic outcomes).
Crane FTP3 B.doc 10/28/2011 10:34 AM
but not obstacles to business progress, and satisfy political demand for ac-
tion from Washington or Brussels. Much of the ideological discourse about
the stringency of antitrust activity consists of counting up merger challenges
and other antitrust enforcement activity within particular administrations.
109

If even a soft and fluctuating merger quota exists, then a decision to revalue
efficiencies could lead to an increase in permission for some categories of
mergers and a decrease in permission for other categories.
It is impossible to demonstrate or quantify the effect of any of these fac-
tors with certainty, but it seems probable that the relative coolness to merger
efficiency arguments may not simply diminish the number of procompetitive
mergers with high efficiencies but also alter the overall portfolio of mergers
that firms consider and propose and that agencies and courts allow and pro-
hibit. This by itself is not a sufficient reason to adopt a symmetry principle
whereby efficiencies and harms of equal weight and probability should be
equally weighted. It is, however, a reason to scrutinize the set of possible
justifications for the principle of asymmetry embedded in U.S. and EU law
and practice and currently being emulated by the scores of merger control
regimes developing around the world.
110

III. Sources of Hostility to Merger Efficiencies
Neither U.S. nor EU lawincluding the relevant statutory or treaty pro-
visions, implementing regulations or enforcement guidelines, and case
lawcontains an explicit acknowledgment of, or justification for, the
asymmetry between predictive harms and efficiencies described in the pre-
vious Section. To be sure, numerous statementspolitical, legal, and
economicas to the reasons for downplaying efficiencies defenses appear
from time to time, but the relevant legal sources make no effort to provide a
systematic account for the asymmetry. This Part identifies and critically
evaluates seven possible justifications or explanations. The first fourthat
productive efficiencies do not benefit consumers, that efficiencies claims are
hard to verify, that many mergers are driven by managerial kingdom build-
ing rather than increasing shareholder value, and that corporate managers
suffer from optimism bias when predicting efficienciesprobably account
for much of the anti-efficiencies defense bias in current U.S. practice. A fifth
assertionthat efficiencies build undue market dominanceonce had cur-
rency in the United States and may still have currency in the European
Union and other jurisdictions. A sixth category of analysisstatus quo bi-
asis part normative justification and part positive explanation. Finally, a
residual category of argumentcentered on the need to preserve a place for

109. See, e.g., Kovacic, supra note 107, at 918 (responding to criticisms of Bush-era
merger enforcement).
110. See Fox & Crane, supra note 14, at 451 (discussing proliferation of merger control
regimes around the globe).
Crane FTP3 B.doc 10/28/2011 10:34 AM
noneconomic social or political values in merger controlcuts across time
and geographic boundaries.
A. Productive Efficiencies Do Not Always Benefit Consumers
The most probable explanation for the asymmetry is an implicit concern
that any efficiencies generated by the merger will be captured by the
merging firms but not passed on to consumers. Since Oliver Williamsons
seminal article in 1968,
111
it has been well understood that mergers can sim-
ultaneously generate efficiencies and consumer harm if the merging firms
appropriate the efficiencies solely for themselves as cost savings and fail to
pass them on to consumers. Total societal welfare may be maximized if the
cost savings exceed the sum of the consumer deadweight losses (and wealth
transfers, if we count those as social costs), and yet consumer welfare may
fall.
Where mergers generate total welfare increases but diminish consumer
welfare, the merger-control regime must decide whether to accept a total
welfare or consumer welfare (or allocative efficiency, its cognate) standard.
In both the United States and the European Union, the currently prevailing
regimes seem to favor a consumer welfare standard. Under EU law, any
merger efficiencies must be sufficient to offset the anticompetitive impact on
consumers,
112
which means that cost savings from mergers that are not
passed on to consumers count for nothing. The U.S. agencies are less clear
on this point, but the bottom line seems to be a commitment to a consumer
welfare perspective. The current guidelines state that [t]he Agencies will
not challenge a merger if cognizable efficiencies are of a character and mag-
nitude such that the merger is not likely to be anticompetitive in any relevant
market and that the Agencies consider whether cognizable efficiencies
likely would be sufficient to reverse the mergers potential to harm custom-
ers in the relevant market, e.g., by preventing price increases in that
market.
113

By contrast, Canada explicitly follows a total welfare standard, with ap-
parent implications for the relative weighting of efficiencies and harms. The
Canadian Competition Act
114
not only allows a merger defense but also
commits Canada to a total welfare standard for mergers under which pre-
dicted harms are to be balanced against cost savings from the merger,
whether or not those savings are ultimately passed on to consumers. Cana-
dian case law calls for a balancing weights standard under which any
increase in surplus arising from the efficiency gain from the merger is bal-
anced against the deadweight loss resulting from the likely anti-competitive

111. Oliver E. Williamson, Economies as an Antitrust Defense: The Welfare Tradeoffs,
58 Am. Econ. Rev. 18 (1968).
112. EU Horizontal Merger Guidelines, supra note 56, 79.
113. HMG 2010, supra note 19, 10.
114. R.S.C. 1985, c. C-34 (Can.).
Crane FTP3 B.doc 10/28/2011 10:34 AM
effects of the merger and, where appropriate, some portion (including possi-
bly all or none) of the associated transfer of surplus from consumers to
producers.
115
Canadian law places the burden of proving harms on the
Competition Bureau and the burden of proving offsetting benefits on the
merging parties,
116
but seems to place no greater weight on either side of the
scale.
The U.S. and European commitment to a consumer welfare criterion for
merger review may provide a strong positive explanation for the asymmet-
rical treatment of harms and efficiencies, but it is not a normatively
appealing one. Even assuming that a normative commitment to consumer
welfare rather than total social welfare is appropriate, this is no reason to
discriminate against efficiencies in the proof requirement. If the commit-
ment to the consumer welfare objective is what motivates the dismissal of
certain forms of efficiency defenses, then the hostility to efficiencies claims
should be limited to those that are not passed on to consumers. Instead, both
the U.S. and European guidelines cut twice against efficiencies defenses,
first by insisting that only consumer-benefiting efficiencies be recognized
and second by requiring heightened proof as to even consumer-benefiting
efficiencies.
One might respond that both jurisdictions guidelines are not really dou-
ble-discounting efficiencies but rather reflecting the fact that antitrust
agencies will cast a jaundiced eye on efficiencies claims since efficiencies
often will not benefit consumers. But casting a jaundiced eye on efficiencies
writ large would only be appropriate if the agencies did not have adequate
tools for predicting which merger efficiencies would be passed on to con-
sumers and which would be appropriated by the merging firms. In fact,
antitrust economics has predictive tools for making those determinations.
Generally, it is understood that fixed cost savings are likely to be appropriat-
ed by the merging firms but that marginal cost savings are likely to be
passed on, to some degree, to consumers.
117
Economists have developed
models for determining the level of marginal cost reductions necessary to
prevent price increases in unilateral effects cases in differentiated goods
118

and, separately, in coordinated interaction cases involving homogeneous

115. Canadian Competition Bureau, Bulletin on Efficiencies in Merger Re-
view 4 (2009) (citing Canada (Commr of Competition) v. Superior Propane Inc. (2000), CT-
1998/002 (Canadian Competition Tribunal)), available at http://www.competition
bureau.gc.ca/eic/site/cb-bc.nsf/vwapj/Bulletin-Efficiencies-Merger-Review-2009-03-02-e.pdf/
$FILE/Bulletin-Efficiencies-Merger-Review-2009-03-02-e.pdf.
116. Id. at 2.
117. Ken Heyer, Welfare Standards and Merger Analysis: Why Not the Best?, Competi-
tion Poly Intl, Autumn 2006, at 29, 3637.
118. See Gregory J. Werden, A Robust Test for Consumer Welfare Enhancing Mergers
Among Sellers of Differentiated Products, 44 J. Indus. Econ. 409 (1996).
Crane FTP3 B.doc 10/28/2011 10:34 AM
products.
119
Other economic work shows that, as a general matter, 50 per-
cent should be the minimum pass-through for marginal cost reductions
assuming linear demand.
120

To be sure, all of these models are subject to challenge and criticism,
and some of them might not be strong enough to stand up to a Daubert chal-
lenge in court.
121
But these sorts of models are similar to the models used to
predict anticompetitive effects and should therefore be considered in the
same light. Lack of certain knowledge on consumer pass-on is not a suffi-
cient reason for undifferentiated hostility to efficiencies defenses even if a
jurisdiction believes that only consumer-benefiting efficiencies should
count. Given those premises, the appropriate approach is to require evidence
of consumer-benefiting efficiencies, not to cast a pall over efficiencies
claims as a class.
One institutional explanation for the asymmetry of treatment is that the
lawyer class in the antitrust agencies distrusts the economist class. As a
class, economists (including many of the staff economists working in the
antitrust enforcement agencies) tend to support a total welfare standard for
antitrust, believing that antitrust is a poor vehicle for addressing distributive
concerns.
122
By contrast, the lawyer classreflecting the consumer wel-
fare perspective of the courts and a moralistic concern about wealth
redistribution and consumer rightstends to prefer a consumer welfare
standard.
123

This asymmetry in perspective between the economist and lawyer clas-
ses shows up in empirical work concerning the separate analysis of
efficiency claims by lawyers working in the FTCs Bureau of Competition

119. See Luke M. Froeb & Gregory J. Werden, A Robust Test for Consumer Welfare
Enhancing Mergers Among Sellers of a Homogeneous Product, 58 Econ. Letters 367
(1998).
120. Jerry A. Hausman & Gregory K. Leonard, Efficiencies from the Consumer View-
point, 7 Geo. L. Rev. 707, 727 (1999). But see Orley Ashenfelter et al., Identifying the Firm-
Specific Cost Pass-Through Rate, (FTC Bureau of Econ., Working Paper No. 217, 1998)
(estimating 21 percent pass-through rate for the Office Depot/Staples merger).
121. See Malcolm B. Coate & Jeffrey H. Fischer, Can Post-Chicago Economics Survive
Daubert?, 34 Akron L. Rev. 795 (2001).
122. See, e.g., Kenneth G. Elzinga, The Goals of Antitrust: Other Than Competition and
Efficiency, What Else Counts?, 125 U. Pa. L. Rev. 1191 (1977) (summarizing economic ar-
guments in favor of an efficiency standard); Fisher & Lande, supra note 1, at 1649 ([M]ost
economists argue that the antitrust laws are a very poor method of wealth redistribution, and
that sound public policy requires one to separate redistributive concerns completely from
efficiencies analysis.); Heyer, supra note 117, at 29 (arguing for a total welfare standard);
Kolasky & Dick, supra note 1, at 230 (noting that most economists argue for a total welfare
approach); Gregory J. Werden, Monopsony and the Sherman Act: Consumer Welfare in a New
Light, 74 Antitrust L.J. 707, 708 n.5 (2007) (Many economists advocate what is termed a
total surplus or total welfare standard.).
123. See, e.g., John B. Kirkwood, Buyer Power and Exclusionary Conduct: Should
Brooke Group Set the Standards for Buyer-Induced Price Discrimination and Predatory Bid-
ding?, 72 Antitrust L.J. 625, 630 n.11 (2005) (observing that many leading law
professors prefer a consumer welfare standard).
Crane FTP3 B.doc 10/28/2011 10:34 AM
and the economists working in the FTCs Bureau of Economics.
124
In the
study of internal staff reports regarding 147 transactions for which a second
request for documents
125
was issued, the studys authors found that the Bu-
reau of Competitions lawyers accepted 8 percent of efficiencies claimed by
the merging parties whereas the Bureau of Economics economists accepted
27 percent of the parties efficiency claims.
126
The FTCs economists seem
to lend considerably greater credence to efficiencies claims than do their
lawyer peers.
Empirical work has shown that the lawyer class tends to predominate in
influence over the economist class in the antitrust enforcement agencies.
127

The devaluation of merger efficiencies in the merger guidelines and in case
law may reflect the lawyer classs effort to prevent the emergence of an im-
plicit total welfare standard. The mere articulation of the consumer welfare
standard in guidelines and case law may be perceived (consciously or un-
consciously) as insufficient to ensure that only consumer-welfare-enhancing
efficiencies count in the relevant calculus.
B. Efficiencies Claims Are Difficult to Prove
One possible reason for the marginalization of efficiencies defenses is
that efficiencies may be difficult to prove. Both the U.S. Horizontal Merger
Guidelines and the agencies commentaries on the guidelines note that many
purported efficiencies are simply never proven or could be achieved in ways
less restrictive of competition.
128
Even in cases where the merging parties
prevail in court or before the agencies in arguing that the merger is unlikely
to create anticompetitive effects, they often lose on the question of whether
they have shown offsetting efficiencies. For example, in the Oracle-
PeopleSoft litigation, Judge Walker rejected the Justice Departments anti-
competitive effects claims and also dismissed Oracles efficiency
justifications as unproven.
129

The justification for this systematic skepticism that efficiencies claims
have not been proven with adequate certainty cannot be merely that the effi-
ciencies claims concern a future eventthe parties cost curve following the
consummation of the mergerand hence are inherently speculative. Predic-

124. Coate & Heimert, supra note 80, at 1332 (describing and comparing merger
efficiency analyses conducted by the Bureau of Competition and the Bureau of Economics).
125. Id. at 67.
126. Id. at 35, 36.
127. Malcolm B. Coate et al., Bureaucracy and Politics in FTC Merger Challenges, in
The Causes and Consequences of Antitrust: A Public Choice Perspective 213, 229
(Fred S. McChesney & William F. Shughart II eds., 1995) (finding, based on empirical study,
that a disagreement between economists and lawyers about whether to challenge a merger is
not a fair fight,

because [l]awyers have greater influence with the commission over the
decision).
128. See Commentary on HMG, supra note 46, at 4859.
129. United States v. Oracle Corp., 331 F. Supp. 2d 1098, 1175 (N.D. Cal. 2004).
Crane FTP3 B.doc 10/28/2011 10:34 AM
tions about anticompetitive effects share the same propertythey rely on
probabilistic efforts to divine the future.
130

A more serious objection is that the current state of economic thinking
has robust tools for establishing anticompetitive effects but not so robust
models for forecasting efficiencies. Hence, one might believe that given
specified demand diversion ratios, unilateral anticompetitive effects of a
certain magnitude are highly likely to follow if the merging parties are the
producers of each others best substitutes. One might also believe that pre-
dictions about combining productive inputs such as factories, machines,
intellectual property, or distribution channels are inherently speculative be-
cause there are no tested and reliable models for predicting such effects.
131

Combining these two prior beliefs, one would then approach anticompetitive
effects stories with greater credulity than efficiencies stories.
But this explanationeven if an accurate positive accountdoes not
provide a strong normative justification for the asymmetrical treatment of
costs and benefits. For one, in at least one circumstanceinnovation theo-
rythe antitrust authorities treat harms and efficiencies asymmetrically
even though they derive from the identical mechanisminnovation through
research and development. Under the 2010 Guidelines, the agencies high-
light concerns over the reduction of innovation incentives as a possible
anticompetitive effect of mergers. For example, section 6.4 of the Guide-
lines states that [t]he Agencies may consider whether a merger is likely to
diminish innovation competition by encouraging the merged firm to curtail
its innovative efforts below the level that would prevail in the absence of the
merger.
132
On the other hand, when discussing efficiencies defenses, the
Guidelines state that research and development synergies are potentially
substantial but are generally less susceptible to verification and may be the
result of anticompetitive output reductions.
133

Some economists claim that innovation effects from mergers are too
speculative to predict with anything approaching scientific rigor,
134
but that
should lead to equal discounting of innovation-harm theories and innova-
tion-enhancement defenses. The Guidelines appear to give credence to
innovation-harm theories even while discounting innovation-enhancement
defenses. Whether or not this is justified in some way, the explanation

130. See supra Section I.A.
131. One might simultaneously believe that there are good models for predicting wheth-
er marginal cost savings will be passed on to consumers, see supra text accompanying notes
117120, and that there are not good models for predicting whether mergers will achieve
marginal cost savings.
132. HMG 2010, supra note 19, 6.4.
133. Id. 10.
134. See, e.g., Richard T. Rapp, The Misapplication of the Innovation Market Approach
to Merger Analysis, 64 Antitrust L.J. 19 (1995).
Crane FTP3 B.doc 10/28/2011 10:34 AM
cannot be a difference in prior beliefs about the likelihood that innovation
effects can be proven to an adequate level of probability.
135

Beyond the example of inconsistency with respect to innovation theo-
ries, the asymmetrical treatment of harms and benefits cannot be justified
conceptually based on the relative differences in strength of probabilistic
proof. That parties may not be able to prove efficiencies in fact does not jus-
tify maintaining a different standard of proof. It is circular to say that
efficiencies should not be lightly used to justify potentially anticompetitive
mergers because efficiencies are difficult to prove, and then reject a particu-
lar instance of purported efficiencies because it failed to meet the high
standard of proof.
C. Mergers Are Driven by Kingdom Building Rather Than
Increasing Shareholder Value
A related explanation for efficiency claim skepticism may derive from a
general suspicion that mergers are driven by corporate managers eager to
enlarge their fiefdoms rather than to maximize returns to shareholders.
Various empirical studies have shown that many large corporate mergers
generate negative shareholder returns.
136
For instance, Scherer and Ra-
venscraft showed that the massive merger wave that peaked during the
1960s resulted in manufacturing inefficiencies that reduced U.S. real gross
national product by between 0.074 and 0.101 percentage points between
1968 and 1976.
137
Carl Shapiro, the recent deputy assistant attorney general
for economics at the DOJs antitrust division, has taken the position that
[e]vidence from the finance, managerial, and economics literatures shows
that many mergers do not work out well . . . . This evidence certainly does
not support the view that merger-specific efficiencies are common or that
claims of efficiencies made by merging parties should generally be credit-
ed.
138

But even assuming that this empire building/agency cost account of
merger activity is true as to some portion of mergers,
139
it does not provide a
sufficient reason for a merger policy asymmetry between costs and efficien-
cies either. Even if large corporate mergers as a class systematically fail to

135. Empirical work has shown, albeit weakly, that the FTC staff tend to give greater
weight to dynamic efficiency claims than to static efficiency claims, suggesting an implicit
inflation in the value of dynamic efficiency claims to match the staffs overall willingness to
accept dynamic inefficiency claims (i.e., theories of harm to innovation incentives resulting
from the post-merger exercise of market power). Coate & Heimert, supra note 80, at 19.
136. See, e.g., David J. Ravenscraft & F.M. Scherer, Mergers, Sell-Offs, and
Economic Efficiency 20710 (1987).
137. F.M. Scherer, A New Retrospective on Mergers, 28 Rev. Indus. Org. 327, 329
(2006) (reporting on key findings from earlier book).
138. Baker & Shapiro, supra note 79, at 256.
139. There are, of course, competing views. See generally George J. Benston, Con-
glomerate Mergers: Causes, Consequences, and Remedies (1980).
Crane FTP3 B.doc 10/28/2011 10:34 AM
generate efficiencies, that finding provides relatively little information on
the likelihood that the specific class of mergers under consideration in diffi-
cult merger review decisions is inherently unlikely to create efficiencies. For
instance, Scherer and Ravenscrafts study focused on conglomerate mergers,
which are not generally a subject of antitrust scrutiny.
140
As Scherer has
written more recently, One might expect opportunities for cost savings and
benefits from complementarity to be much stronger for horizontal and verti-
cal mergers than for conglomerates, and so the record of widespread failure
we documented may simply have become irrelevant.
141
As to the class of
mergers in which the efficiency defense generally comes into play, there is
no reason for strong prior beliefs on whether efficiencies are likely or un-
likely.
D. Counterattacking Optimism Bias
A possible justification related to, but analytically distinct from, the last
two discussed is that governments and courts need to adjust the standard of
proof because parties to proposed mergers are systemically overoptimis-
tic.
142
Generically, business managers make overly optimistic predictions
about the future success of their firms, including the efficiencies that they
could capture from a merger.
143
Thus, if one were to take the set of all mer-
gers that managers consider, ask the managers to predict what efficiencies
they might capture from the merger, and then track actual results
postmerger, one would expect that sum of captured efficiencies to be less
than the sum predicted by managers. Furthermore, not all managers who
consider mergers carry through with the idea. The ones most likely actually
to propose a merger are the most optimistic ones. Hence, the set of merger
proposals that antitrust agencies have to screen may be skewed by systemat-
ic overoptimism.
144
Since regulators and courts lack good information on

140. Alan Devlin, Antitrust in an Era of Market Failure, 33 Harv. J.L. & Pub. Poly
557, 596 (2010) (Conglomerate mergers, which are combinations of firms that are neither
vertically nor horizontally related, do not bear the potential for unilateral or coordinated price
effects and have not been an object of U.S. antitrust concern in this generation.).
141. Scherer, supra note 137, at 330.
142. Cf. Neil D. Weinstein, Unrealistic Optimism About Future Life Events, 39 J. Per-
sonality & Soc. Psychol. 806, 806 (1980) (describing the optimism bias phenomenon).
143. See Anand Mohan Goel & Anjan V. Thakor, Rationality, Overconfidence and Lead-
ership 34 (Univ. of Mich. Ross Sch. of Bus. Working Paper Ser., Paper No. 00-022, 2000),
available at http://deepblue.lib.umich.edu/bitstream/2027.42/35648/2/b2034712.0001.001.pdf
(showing that overconfident managers are more likely to be selected as leaders than less confi-
dent managers).
144. Jonathan B. Baker & Carl Shapiro, Detecting and Reversing the Decline in Hori-
zontal Merger Enforcement, Antitrust, Summer 2008, at 29, 33 (There is considerable
evidence that acquiring firms are systematically over-optimistic about the efficiencies they can
achieve through acquisition. This evidence does not support the view that merger-specific
efficiencies are common or that claims of efficiencies made by merging parties should gener-
ally be credited.).
Crane FTP3 B.doc 10/28/2011 10:34 AM
which mergers would actually generate efficiencies, they may need to re-
spond to this systematic bias by requiring particularly compelling proof of
efficiencies.
The problem with this justification for a differential standard of proof
for efficiencies and harms is that it assumes that only one side of the ledger
manifests bias. In order to justify a principle of legal or administrative
asymmetry, it would need to be the case that the proponents of theories of
harm manifest a lesser degree of systematic bias than the proponents of effi-
ciencies. In civil litigation, for example, it is obvious that the plaintiffs are
biased to see the facts most favorably to themselves and hence bring many
meritless cases. This would be a good reason to require proof by a standard
greater than preponderance of the evidence except for the fact that defendants
are equally biased in the direction of denying liability and seeking exculpa-
tion. The accommodation is that the fact finder must scrutinize each side of
the ledger with some degree of skepticism, although the standard of proof
remains set at equipoise (except in those cases where, for collateral reasons,
some higher degree of proof is preferred).
145

Conceding that merger proponents are biased to believe that efficiencies
will result, what is the evidence that merger opponents are neutral with re-
spect to anticompetitive effects? The first class of relevant merger opponents
is the business interests that sometimes mobilize to persuade the antitrust
agencies to block a merger. For example, when Google announced its inten-
tion to purchase ITA Software, a provider of software services to internet
travel search sites, a coalition of rivals including Microsoft, TripAdvisor,
Expedia, Kayak, and Hotwire launched a public relations campaign to con-
vince antitrust enforcers to block the deal.
146
Likewise, the European
Commissions decision to block GEs acquisition of Honeywell may have
been influenced by GEs competitors, concerned about a more powerful
rival.
147
It is not unusual to observe competitors scrambling to oppose mer-
gers that may diminish their relative standing in the market.
Often, the pressures against mergers are more subtle and, indeed, diffi-
cult to assess. Rivals of the merging firms have complex incentives. They
may disfavor the merger because it creates a stronger competitor, favor the
merger because it creates a more concentrated market in which tacit collu-
sion is easier, disfavor the merger because it creates a more concentrated
market that makes the rivals own future acquisitions harder to justify, or
favor agency approval because it sets a precedent for their own future deals

145. See McCormick on Evidence 33839 (Kenneth S. Broun ed., 6th ed. 2006).
146. The coalition is named Fair Search. Fair Search, http://www.fairsearch.org (last
visited Aug. 15, 2011).
147. Eleanor M. Fox, GE/Honeywell: The U.S. Merger that Europe StoppedA Story of
the Politics of Convergence, in Antitrust Stories 331, 339 (Eleanor M. Fox & Daniel A.
Crane eds., 2007) (reporting that teams of lawyers from United Technologies, Rolls-Royce,
and Rockwell Collins visited European Commissions Directorate General for Competition to
complain about the GE/Honeywell deal).
Crane FTP3 B.doc 10/28/2011 10:34 AM
(on the theory that competition in the market is robust).
148
It is impossible to
capture the direction or magnitude of this bias as a class. Customers also
have incentives with respect to mergers of their suppliers that are difficult to
map.
149

A second kind of bias concerns the incentives of antitrust enforcers.
Public choice literature suggests that antitrust enforcers are not merely de-
tached public servants on a truth-seeking expedition.
150
They are susceptible
to all of the usual biases and influences of regulators. They may oppose
mergers in order to aggrandize their own agencys influence, justify their
agencys budget, get into newspaper headlines, support a political partys
standing, pacify a member of Congress, advance an ideological agenda, or
promote their individual careers.
This is not to say that antitrust enforcers are untrustworthy as a class.
Rather, it is to acknowledge that systematic bias in merger control is not
unilateral. Unless one believes that the optimism bias of merger proponents
is so strong that it swamps all other influencesa proposition without sub-
stantial supportthere is no reason to deviate from symmetry in the
standards of proof for efficiencies and harms.
E. Efficiencies Create Undue Dominance
The previous lines of argument rested on skepticism that mergers often
generate efficiencies. A different line of argument accepts that mergers often
do generate efficiencies and affirmatively counts them against the merger on
the theory that efficiencies acquired through merger upset the balance of the
playing field and tend toward long-run dominance in the merging firms.
This suspicion of merger efficiencies as creating unwholesome competi-
tive advantages has a storied history in U.S. case law. In Brown Shoe, the
Court found that the efficiencies created by vertical integration between a
shoe manufacturing company and a shoe retailer counted against a vertical
merger since by eliminating wholesalers and by increasing the volume of
purchases from the manufacturing division of the enterprise, [the merging
parties] can market their own brands at prices below those of competing
independent retailers.
151
The FTC extended this view in Foremost Dairies,
Inc.,
152
where it rejected a dairy industry merger that would likely have re-
sulted in significant synergies and access to capital markets.
153
It held that a

148. See generally HMG 2010, supra note 19, 2.2.3 (discussing the difficulties with
relying on competitors opinions in merger cases).
149. See Ken Heyer, Predicting the Competitive Effects of Mergers by Listening to Cus-
tomers, 74 Antitrust L.J. 87 (2007).
150. See generally The Causes and Consequences of Antitrust: The Public
Choice Perspective (Fred S. McChesney & William F. Shughart II eds., 1995) (discussing
the application of public choice theory to antitrust enforcement).
151. Brown Shoe Co. v. United States, 370 U.S. 294, 344 (1962).
152. 60 F.T.C. 944 (1962), modified, 67 F.T.C. 282 (1965).
153. Id. at 108384.
Crane FTP3 B.doc 10/28/2011 10:34 AM
showing that the acquiring firm possesses significant market power in some
markets or that its over-all organization gives it a decisive advantage in effi-
ciency over its smaller rivals demonstrates a violation of section 7 of the
Clayton Act.
154
In FTC v. Procter & Gamble Co., the Supreme Court backed
away from the view that efficiencies could count against a merger, holding
that they could count neither for nor against a merger.
155
Procter & Gamble
remains, by virtue of inertia, the official position in Supreme Court jurispru-
dence, although the Court has not decided a merger case since 1976 and it is
doubtful that it would follow that position today.
156

On the European side, something similar may have happened in the re-
view of the GE/Honeywell merger. The ECs portfolio effects theory
depended on a prediction that the combination of the resources of GEs var-
ious divisions, including GE Capital and GEs engine divisions, with
Honeywells avionics products would allow the merged firms to charge
lower prices to their consumers and hence distort the level playing field.
157

Although Mario Montithe ECs Competition Commissionerdenied that
the portfolio effects theory was a rejection of an efficiency defense,
158
it is
hard to understand the argument as anything other. The specific theories in-
voked, such as the elimination of double marginalization through bundling
and leveraging the ability to extend credit across larger commercial enterpris-
es, are precisely the kinds of efficiency defenses often raised in vertical and
horizontal cases. The Commission also appeared to hold efficiencies against
a merger in two earlier cases, Aerospatiale/De Havilland and Boe-
ing/McDonnell-Douglas,
159
and in a more recent case, Vodafone
AirTouch/Mannesmann.
160

Assuming for the sake of argument that merger efficiencies sometimes
destabilize competition and create market dominance, these are not reasons
for undifferentiated hostility to merger efficiencies. Even if some merger
efficiencies harm competition, these are surely a minority of all merger
cases. The merging firms may be merging simply to catch up with other
firms that have already achieved particular efficiencies. Or, other nonmerg-

154. Id. at 1084.
155. 386 U.S. 568, 580 (1967) (Possible economies cannot be used as a defense to
illegality. Congress was aware that some mergers which lessen competition may also result in
economies but it struck the balance in favor of protecting competition.).
156. See Phillip E. Areeda & Herbert Hovenkamp, Fundamentals of Antitrust
Law 9.09c, at 9-02 (4th ed. 2011) (The Courts brief and unelaborated language cannot
reasonably be taken as a definitive disposition of so important and complex an issue as the
proper role of economies in analyzing the legality of a merger.).
157. See Fox, supra note 147, at 33940 (discussing the Commissions findings on the
portfolio theory).
158. Id. at 344.
159. Pitofsky, Efficiency Consideration, supra note 1, at 142324.
160. Philip J. Weiser, Reexamining the Legacy of Dual Regulation: Reforming Dual
Merger Review by the DOJ and the FCC, 61 Fed. Comm. L.J. 167, 188 (2008).
Crane FTP3 B.doc 10/28/2011 10:34 AM
ing firms have alternative paths for matching efficiencies generated by the
merging parties and a new incentive to do so.
Moreover, the claim that efficiencies will likely occur and, in the long
run, destabilize competition to the detriment of consumers is necessarily
more speculative on average than a merger efficiencies defense since it re-
lies on proof not only that efficiencies will occur but that they will
subsequently destabilize competition. It makes no sense to hold defendants
to a high standard of proof that procompetitive efficiencies would result if
the merger were approved and simultaneously hold the government to a low
burden of proof that anticompetitive efficiencies would result. Whats sauce
for the goose is sauce for the gander.
F. Status Quo Preference
Another cluster of possible reasons for a principle of asymmetry relates
to a general preference for the status quo over change. The relevant phe-
nomena could be grouped under a number of different headings, including
risk aversion, endowment effect, loss aversion, status quo bias, and the pre-
cautionary principle. For simplicity, I consider them under the headings of
loss aversion, the precautionary principle, and deconcentration as a political
value.
1. Loss Aversion
Antitrust regulators may react asymmetrically to potential losses and
gains. It is well established in behavioral theory that decisionmakers, includ-
ing regulators, sometimes weight potential losses more than potential gains
of an equivalent magnitude.
161
If regulators consider the competitive status
quo the relevant baseline, then anticompetitive effects may count as losses
whereas merger-specific efficiencies may count as gains. This would then
explain the asymmetry principlethat efficiencies must be more certain
than harms in order to offset the harms.
A more particular explanation for asymmetry concerns the political con-
sequences of prohibiting or approving a merger. An antitrust enforcement
agency will face blame for price increases resulting from a merger but rarely
for price decreases that did not occur because a merger was wrongly
blocked.
162
Hence, the agencies have a greater incentive to block mergers

161. See, e.g., Roger G. Noll & James E. Krier, Some Implications of Cognitive Psychol-
ogy for Risk Regulation, 19 J. Legal Stud. 747, 758 (1990).
162. For example, commentators have blamed high oil prices on lax merger enforcement
in the oil industry. See Pub. Citizen, Mergers, Manipulation, and Mirages: How Oil
Companies Keep Gasoline Prices High, and Why the Energy Bill Doesnt Help 1
(2004), available at http://www.citizen.org/documents/oilmergers.pdf (The United States has
allowed multiple large, vertically integrated oil companies to merge over the last five years,
placing control of the market in too few hands. The result: uncompetitive domestic gasoline
markets.).
Crane FTP3 B.doc 10/28/2011 10:34 AM
that might result in gains to consumers than to approve mergers that might
result in losses to consumers.
While loss aversion may explain the asymmetry principles existence, it
cannot justify the principle normatively. Even assuming that consumer loss
aversion is normatively neutral,
163
regulatory loss aversion is categorically
undesirable unless it channels the preferences of political constituents in a
democratically legitimate way. There is no good reason to think that con-
sumers, as a class, would exhibit loss aversion as to merger decisions as a
class. To be sure, the consumers affected by a particular mergersay one
involving dog foodmight exhibit loss aversion as to that particular merger.
But consumers who buy dog food also buy toothpaste, DVD players, and
life insurance, all of whose industries are also subject to merger policy. As
to the class of merger activities, they are diversified and therefore should
prefer a strategy that maximizes their overall wellbeing, even if would it
lead to occasional price increases.
164
Regulatory loss aversion in the merger
context seems merely to reflect the self-preservationist biases of regulators.
2. Precautionary Principle
Another source of status quo bias or preference may derive from more
general theories of cost-benefit analysis. Cass Sunstein has identified a pre-
cautionary principle at work in almost every legal system.
165
Under the
precautionary principle, when a new behaviorsuch as the introduction of a
new drugcreates a risk of harm, the proponents of the new behavior bear a
heavy burden of disproving the likelihood of harm before the change should
be allowed. Thus, for example, if a new drug might cause cancer as a side
effect, it should be kept off the market until the issue is fully studied and the
cancer risk ruled out. Merger harms may thus be given more weight than
merger efficiencies because the merging partiesthe proponents of
changebear the burden of ruling out the possibility that their activity will
lead to harm.
As Sunstein notes, however, this principle can be paralyzing because
it prohibits both action and inaction.
166
For example, suppose that the drug
creates a 10 percent risk that 100 people will die but a 10 percent probability
that 100 people will be saved. Allowing the new drug risks killing 100 peo-
ple but disallowing the new drug also risks killing 100 people. What is
called for in such a situation is not an application of some a priori principle

163. See Matthew D. Adler, Welfare Polls: A Synthesis, 81 N.Y.U. L. Rev. 1875, 1917
(2006) (describing loss aversion as a kind of preference distortion).
164. See Richard A. Posner, Are American CEOs Overpaid, and, If So, What If Anything
Should Be Done About It?, 58 Duke L.J. 1013, 1037 (2009) (discussing relationship between
loss aversion and diversification).
165. Cass R. Sunstein, Beyond the Precautionary Principle, 151 U. Pa. L. Rev. 1003
(2003).
166. Id. at 1004.
Crane FTP3 B.doc 10/28/2011 10:34 AM
about avoiding risks but rather a cost-benefit analysis given the relative
probabilities and magnitudes of the respective risks of action and inaction.
Nonetheless, there may be circumstances when some version of the pre-
cautionary principle carries weight. The first strain involves changessuch
as pollution leading to global warming or deregulation of nuclear facili-
tiesthat entail an uncertain probability of irreversible catastrophic
consequences.
167
The second involves changes with uncertain, and potential-
ly unjust, distributive consequences.
168
Neither of these strains of
precautionary principle theory provides support for a principle of asym-
metry in merger review.
The irremediable catastrophic event strain of the precautionary principle
has no application to mergers. Merger policy involves calculations of risk
bounded predictionsrather than complete uncertainty.
169
The consequenc-
es of anticompetitive mergers, even if undesirable, are hardly ever
catastrophic. Most significantly, mergers are not irremediable. It is possible
(although difficult) to force parties to unwind an anticompetitive merger if
they begin to exercise anticompetitive power because of the merger.
170

If anything, the option to unwind mergers that turn out to be anticompet-
itive suggests that efficiencies should be given more weight than theories of
harm. Once a merger is blocked, there is virtually no chance that the merger
will be allowed at some future point. This is for two reasons. First, given the
time sensitivity of most mergers, deals that are not consummated quickly are
usually never consummated.
171
Second, once an agency or court has blocked
a merger for antitrust reasons, subsequent events will not usually provide it
an occasion to rethink its position and allow the merger to transpire. If the
market remains essentially static, then there will usually be little reason to
make a different prediction about competitive effects a few years after the
initial decision. If the market changes considerably, for example because of
entry or exit of firms, significant changes in consumer demand, or the intro-
duction of new technologies, the merger review calculus of the agencies

167. See Cass R. Sunstein, The Catastrophic Harm Precautionary Principle, Issues in
Legal Scholarship (2007), available at http://www.bepress.com/ils/iss10/art3/; Cass R.
Sunstein, Irreversibility, 9 L. Probability & Risk 227, 23536 (2010); Cass R. Sunstein,
Irreversible and Catastrophic, 91 Cornell L. Rev. 841 (2006).
168. See, e.g., Sunstein, supra note 165, at 1035 (explaining that many advocates of the
precautionary principle are principally motivated by protecting the most vulnerable people
from risks to their safety and health).
169. See Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk
133 (1996) (discussing the distinction between uncertainty and risk and explaining that
[u]ncertainty means unknown probabilities while risk is measurable).
170. See HMG 2010, supra note 19, 2.1.1 (discussing evidence that might support
unwinding of consummated merger). In 2011, the Justice Department reached a settlement
with Dean Foods Company in a consummated merger case; the settlement required Dean
Foods to divest a milk processing plant and related assets. United States v. Dean Foods Co.,
No. 2:10-cv-00059 (JPS) (E.D. Wis. Mar. 29, 2011) (competitive impact statement), available
at http://www.justice.gov/atr/cases/f269000/269057.pdf.
Crane FTP3 B.doc 10/28/2011 10:34 AM
changes, but so does the merger calculus of the parties. One finds very few
examples of mergers initially prohibited but then allowed a few years later.
The upshot is that the option value of disallowing a merger after con-
summation is greater than the option value of allowing a merger after initial
prohibition. Even if the option value of unwinding a merger is small given
the costs to the agencies and parties, given that the option value of allowing
a merger in the future is close to zero, option theory cuts in favor of either
neutrality between harms and efficiencies or a slight preference for efficien-
cies.
The other argument sometimes made in support of some version of the
precautionary principle is that because changes in social or economic struc-
turessuch as mergershave distributive consequences, regulatory
decisionmakers need to rule out the possibility that the distributive changes
would be unjust if the merger were approved.
172
But that argument has little
to do with merger policy, since regulatory decisionmakers generally lack
good information on the distribution of gains and losses from mergers as
between classes of consumers.
173
They do know something about the
predicted distribution of gains and losses between producers and
consumersand in consumer welfare jurisdictions at least insist the net
consumer position be predicted as positive. But this is very different from
being able to predict that a merger will lead to a welfare gain for old people
and a welfare loss for poorer people, or other such trade-offs within the con-
sumer class that might be expected in other regulatory contexts, such as
those dealing with the side effects of drug therapies or changes in workplace
safety rules.
The same is true of mergers. It makes no sense to give more weight to
merger risks than to benefits of equal probability and magnitude. The risks
and benefits simply need to be weighed given the best available evidence
about their relative probabilities and magnitudes.
3. Deconcentration as a Political Value
A final potential reason for discriminatory treatment of risks and effi-
ciencies relates to what Bob Pitofsky has referred to as antitrusts political
content.
174
Perhaps mergers that increase concentration to certain thresh-
olds should be barred for political or social reasons, even if there are
efficiencies sufficient to offset any harms to consumers.
The political content argument could come in two very different fla-
vors, and distinguishing between them is essential to testing the soundness
of the proposition. One version of the argumentconsistent with the
mid-twentieth-century U.S. congressional concern with a rising tide of

172. See, e.g., Sunstein, supra note 165.
173. Daniel A. Crane, Technocracy and Antitrust, 86 Tex. L. Rev. 1159, 121314
(2008).
174. Robert Pitofsky, The Political Content of Antitrust, 127 U. Pa. L. Rev. 1051 (1979).
Crane FTP3 B.doc 10/28/2011 10:34 AM
concentration in the U.S. economy
175
would worry about the overall level
of concentrated economic power in the private sector. The other version
would be concerned about aggregations of market power in specific, cultur-
ally or politically sensitive industries.
The rising tide argument depends on an empirical observation that a
particular nations economy has reached a concentration danger zone that
justifies condemning mergers of a certain threshold, even if those mergers
are justified by consumer-friendly efficiencies. It is far from true that such a
case could be made today, certainly at least for the U.S. economy. To take
one snapshot, in 1980 the U.S. economy had 2.7 million corporations, 1.4
million partnerships, and 9.7 million nonfarm sole proprietorships.
176
Two
decades later, after a period generally thought to have been characterized by
lax merger enforcement, the economy had 5.5 million corporations, 2.0 mil-
lion partnerships, and 17.7 million nonfarm sole proprietorships.
177
The top
1,000 firms accounted for a smaller share of gross domestic product than
they did fifty years earlier.
Further, even if one were to find rising tide arguments generally ap-
pealing, there is an instrumental mismatch between a deconcentration policy
objective and hostility to efficiencies defenses. Many gargantuan corporate
mergers raise few antitrust concerns because the merging firms have few or
no competitive overlaps or because they occur in relatively unconcentrated
markets. Such mergers contribute far more to an increasing consolidation of
economic power in the economy as a whole than do many mergers of small
companies that attract antitrust attention because they occur in concentrated
markets.
178

175. United States v. Vons Grocery Co., 384 U.S. 270, 276 (1966) (

The dominant
theme pervading congressional consideration of the 1950 amendments was a fear of what was
considered to be a rising tide of economic concentration in the American economy. To arrest
this rising tide toward concentration into too few hands and to halt the gradual demise of the
small businessman, Congress decided to clamp down with vigor on mergers. (quoting Brown
Shoe Co. v. United States, 370 U.S. 294, 315 (1962))).
176. Lawrence J. White, Whats Been Happening to Aggregate Concentration in the
United States? (And Should We Care?) 14 (N.Y.U. Ctr. for L. & Bus. Res., Working Paper No.
CLB-01-008, 2001), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id
=293822.
177. Id.
178. As a matter of legal doctrine and legislative intent, one might argue that U.S. law
requires a rejection of even efficiency-creating mergers that signal incipient concentration
increases that could lead to future competitive problems. See generally Robert H. Lande, Res-
urrecting Incipiency: From Vons Grocery to Consumer Choice, 68 Antitrust L.J. 875
(2001). However, incipiency values can be embedded in the governments theory of harm and
need not detract from a consideration of efficiencies. For example, the government might
express its theory of harm as the probability that the merger under consideration would precip-
itate a chain of events causing an increase in market concentration, which in turn could
produce anticompetitive harms to consumers. That theory would then be considered on a
probability-adjusted net present value basis in light of efficiencies potentially resulting from
the merger.
Crane FTP3 B.doc 10/28/2011 10:34 AM
The second argumentthat aggregations of market power in culturally
or politically sensitive industries may be undesirable even if those aggrega-
tions result in efficienciesis also not a general justification for an
asymmetrical approach to merger costs and benefits. Assuming that political
or social considerations sometimes count in favor of blocking a merger, such
values should not be concealed in an implicit hostility to efficiencies. In-
stead, they should be affirmatively expressed and weighed against other
values in the context of merger review in the limited set of cases to which
they apply.
Suppose, for example, that a large media merger increases concentration
to levels that raise competitive concerns or achieves vertical integration that
could potentially be used to block competitors from access to essential in-
puts. Suppose that the merger would also generate large efficiencies that
would be passed on to consumers. Further suppose that there is a legitimate
concern that concentrating too much power over news or entertainment in
single managerial hands would lead to cultural or political hegemony
concerns that were raised with respect to AOLs merger with Time Warner
179

and Comcasts acquisition of NBC.
180
Step one in the analysis should re-
quire weighing the anticompetitive risks to consumers against the
efficiencies, using an equal probability burden. At the second stage in the
analysis, the separate political or social concerns should be raised and ad-
dressed in a transparent and open way.
To be sure, different valuessuch as consumer welfare and avoidance
of cultural hegemonyare often difficult to compare because they are in-
commensurable. But that is all the more reason to raise and explore each
value separately, as opposed to burying one value in an implicit reluctance
to recognize another.
IV. Revaluing Merger Efficiencies
The preceding Part questioned the possible legal, economic, and politi-
cal justifications and explanations for asymmetrical treatment of merger
costs and efficiencies. Since none of those justifications are sufficient to jus-
tify asymmetrical treatment, ordinary principles of cost-benefit analysis
should apply to merger review. In particular, the predicted costs of mergers
from the postmerger exercise of market power should presumptively be

179. See Frank Rich, Journal; Two 21st Century Foxes Elope, N.Y. Times, Jan. 15, 2000,
at A17 (If you believe that the Internet is the greatest explosion of free expression and cultur-
al resources of the past century, what happens when it is merchandised as a mass-market
product by the biggest corporations in history?).
180. See Gautham Nagesh, Lawmakers Divided Over Whether NBC-Comcast Merger
Would Aid Diversity, Hillicon Valley (Oct. 27, 2010, 10:33 AM), http://thehill.com/blogs/
hillicon-valley/technology/126051-nbc-comcast-merger-divides-lawmakers-on-diversity.
Crane FTP3 B.doc 10/28/2011 10:34 AM
equally weighted with the predicted efficiencies of mergers with an equal
present value.
181

In order to operationalize a symmetrical approach, attention needs to be
paid to three implementation issues. The first concerns the relationship be-
tween the standard of proof and the burden of proof. The second concerns
questions of commensurability and balancing. The third concerns the in-
creased costs that would arise from injecting greater complexity into merger
review.
A. Standards of Proof and Burdens of Proof
This Article calls for a symmetrical standard of proof for merger effi-
ciencies and predicted anticompetitive effects. That does not mean, however,
that the government should be required to disprove possible efficiencies as
part of its evaluation of the case. The weighting of costs and benefits is a
separate question from the allocation of the burden of proof. As a general
matter, burdens of proof should be allocated to the party who can obtain the
relevant information at the lower cost.
182
In merger cases, the information
validating efficiency claims is often uniquely in the possession of the merg-
ing parties, and it therefore makes sense that the merging parties should bear
the burden of sustaining efficiencies claims. Conversely, the government
should ordinarily bear the burden of establishing predictive anticompetitive
effects.
183

If the government and merging parties were held to the same standard of
proofpreponderance of the evidence, for examplethen, conceptually,
harms and efficiencies would be given equal weight despite the different
allocations of burdens of proof. This does not mean, however, that the merg-
ing parties would find it as easy to prove efficiencies as the government
would to prove harms. It may be the case that certain classes of efficiencies
are difficult to demonstrate even to fairly low thresholds of proof on a case-
specific basis, even though there is a high degree of probability that they
frequently appear in mergers.
184

If probabilities of harm are easier to demonstrate on an individualized
basis than probabilities of efficiencies, even though in the aggregate both

181. See generally Simons & Crane, supra note 49. The present value qualifier is nec-
essary to highlight the fact that some efficiencies may not materialize for several years. For
example, if two merging firms plan to close their existing inefficient plants and open a single
new and more efficient plant within three years following the merger (but only if they are able
to mergemaking the new plant a merger-specific efficiency), the future efficiencies resulting
from the merger should be discounted to reflect the fact that the possible anticompetitive
harms could begin immediately following consummation of the merger.
182. See Christopher B. Mueller & Laird C. Kirkpatrick, Evidence 3.1 (4th ed.
2009).
183. See generally United States v. Baker Hughes Inc., 908 F.2d 981, 98992 (D.C. Cir.
1990) (discussing allocation of burdens of proof in merger litigation).
184. See Fisher & Lande, supra note 1, at 165354.
Crane FTP3 B.doc 10/28/2011 10:34 AM
harms and efficiencies are similarly likely in the relevant categories of cases,
then merger policy will display a bias in favor of theories of harm even if it
adopts an explicit symmetry principle. If so, then some systematic adjust-
ment toward leniency, of the type advocated by Fisher and Lande, might still
be justified.
185
However, the first-order preference should be to treat harms
and benefits symmetrically on an individualized basis and only make a sys-
tematic correction to the extent necessary in light of the systems actual
experience with a principle of symmetry.
B. Balancing and Problems of Commensurability
Many commentators assertas do the Horizontal Merger Guidelines
that the interplay between predictions of harm and predictions of efficien-
cies cannot come down to balancing.
186
The influential Areeda and
Hovenkamp treatise argues as follows:

Balancing implies an ability to
assign a common unit of measurement to the two things being balanced, and
determine which outweighs the other. Except in the clearest cases, this is
simply not what courts are capable of doing.
187

Indeed, it is often difficult to assign specific weights to anticompetitive
effects and offsetting efficiencies given (a) uncertainty in the robustness of
methodological tools, (b) data limitations with respect to future events, and
(c) the likely timing in which anticompetitive effects or efficiencies may
take effect and their subsequent duration. Small predictive differences gen-
erated by imprecise methodological tools and imperfect data make large
differences in assigning probability-adjusted values. In most cases, it will be
impossible to apply the suggested formulaassign equal weight to proba-
bility-adjusted net present valuesmathematically and therefore to engage
in anything approaching rigorous balancing.
188
The 40 percent probability
of a $100 loss or gain hypothetical presented in the Introduction is just
thata hypothetical.
But the failure of commensurability is not a reason to abandon symmet-
rical treatment as an analytical principle. Rather, it is a reason to use the
principle of symmetrical treatment as a policy mnemonic device, much as
we already use mathematically indeterminate concepts like probable cause

186. See Areeda & Hovenkamp, supra note 156, 6.04e3, at 638; Craig W. Conrath
& Nicholas A. Widnell, Efficiency Claims in Merger Analysis: Hostility or Humility?, 7 Geo.
Mason L. Rev. 685, 686 (1999) (The difficult challenge presented by such an efficiencies
defense is whether there is a coherent way to balance the potential anticompetitive effects
against its potential efficiency benefits.); cf. Renckens, supra note 1, at 179 (arguing that
balancing of efficiencies and theories of harm can only take place under a total welfare effects
framework).
187. See 4A Areeda & Hovenkamp, Antitrust Law 976e, at 105 (3d ed. 2009).
188. But see Coate, supra note 1, at 20607 (arguing that econometric tools have suffi-
ciently developed to permit calculations of net effects of efficiencies and increases in market
power to be computed in some cases).
Crane FTP3 B.doc 10/28/2011 10:34 AM
and reasonable suspicion to capture probability values around identified le-
gal decisions. At present, the Guidelines contain a mnemonic device of
asymmetrythe Agencies will not simply compare the magnitude of the
cognizable efficiencies with the magnitude of the likely harm to competition
absent the efficiencies.
189
They do not pretend that merger review involves
precise computations of the probabilities of harms and benefits and a speci-
fied discountsay 20 percenton the probability-adjusted net present
value of expected efficiencies before efficiencies are balanced against
harms. If the mnemonic device of asymmetry is insupportable, as argued in
this Article, then the proper response is to implement a mnemonic device of
symmetry.
Changing verbal formulations in merger guidelines or case law is, of
course, not enough to effectuate meaningful change in agency or judicial
practice. The real point is that agencies and courts should be asked to think
about merger efficiencies (at least those likely to be passed on to consumers)
and predicted harms as concepts with equal prima facie dignity. By various
institutional, legal, political, and administrative mechanisms, merger effi-
ciencies have been deflated. They deserve a more hospitable welcome.
C. Costs of Increased Complexity
The final consideration concerns the enhanced costs of revaluing merger
efficiencies. Commentators, particularly Fisher and Lande, have argued
against individualized efficiencies defenses on the grounds that they in-
crease both transaction coststo parties, agencies, and courtsand
uncertainty costs, since predicting whether a court or agency will accept an
efficiencies argument is difficult.
190

To be sure, an explicit or implicit revaluation of merger efficiencies will
induce parties to spend more time presenting efficiencies arguments and
require courts and agencies to spend more time considering them. That in
itself is not a sufficient objection unless the marginal social benefit of a
more fine-tuned merger review system is less than the marginal cost of pro-
cessing more information. Two observations suggest that the costs of
individualized efficiencies review are not great given the status quo.
First, Fisher and Lande presented a choice between no individualized
consideration of efficiencies and symmetrical treatment of efficiencies and
harms.
191
In fact, both the United States and the European Union currently
allow parties to make efficiencies arguments. As noted earlier, the FTC
study shows that parties usually do and that the staff responds to them.
192

Neither the agencies nor the parties spend as much time on efficiencies ar-
guments as they would if a symmetry principle were adopted, so there

189. HMG 2010, supra note 19, 10.
191. Id. at 1652.
Crane FTP3 B.doc 10/28/2011 10:34 AM
would be some marginal cost to putting a greater weight on efficiencies. But
the marginal cost need not be large, given that much of the information is
already collected and disseminated.
Second, it is doubtful that a greater receptivity to efficiencies claims
would substantially increase the unpredictability of merger decisions in the
agencies. Fisher and Lande expressed their concern over unpredictability
costs at a time when merger review was far more predictable than it is today.
Structural presumptions, such as four-firm ratio tests and the HHI, still
dominated merger analysis.
193
Over the last three decades, antitrust analysis
has progressively deemphasized structural factors, moved toward more
sophisticated econometric tools, and increasingly emphasized unilateral
effects theories of anticompetitive harms.
194
The 2010 Horizontal Merger
Guidelines reflect these trends:
These Guidelines should be read with the awareness that merger analysis
does not consist of uniform application of a single methodology. Rather, it
is a fact-specific process through which the Agencies, guided by their ex-
tensive experience, apply a range of analytical tools to the reasonably
available and reliable evidence to evaluate competitive concerns in a lim-
ited period of time.
195

The analysis has become far more nuanced and technicaland therefore
less predictable. Lawyers can no longer offer their clients clean predictions
in many potentially close cases.
The fact that merger analysis has become less predictable is not a reason
to pile on additional and unnecessary unpredictability. But given that merger
review teamsboth at the parties and at the agenciesalready require the
involvement of economists and industry experts in close cases and that these
teams already consider efficiencies to some extent, relatively little marginal
cost or unpredictability would be added by directing these teams to take
efficiencies more seriously.
Conclusion
Merger policy has long been dominated by a focus on only one side of
the ledgeranticompetitive effects. The reasons offered for ignoring the
other side of the ledger are weak and often contradictory. A principle of
symmetrical treatment of predicted harms and efficiencies would improve
merger policy, without necessarily liberalizing it in undesirable ways.
For cultural and institutional reasons, the United States and the
European Union are relatively unlikely to recognize a symmetry principle in

193. Deborah A. Garza, Market Definition, the New Horizontal Merger Guidelines, and
the Long March Away from Structural Presumptions, Antitrust Source, Oct. 2010, at 1, 2
(explaining importance of structural presumptions in 1968 and 1982 Horizontal Merger
Guidelines).
195. HMG 2010, supra note 19, 1.
Crane FTP3 B.doc 10/28/2011 10:34 AM
the near future. Both jurisdictions have already had to overcome a view that
efficiencies should count against mergers. Even conceding that efficiencies
should play some small role in merger analysis was a big step. The United
States and the European Union are unlikely to take the final step to a sym-
metry principle any time soonparticularly given the maintenance of
principles of asymmetry in recent merger guidelines revisions.
But the evolution of norms on the ground often precedes the evolution of
norms on the books. Particularly as the agencies move away from structural
presumptions and focus their attention on unilateral anticompetitive effects
theories in differentiated markets, there is an opportunity for greater atten-
tion to efficiencies that may offset competitive concerns.
And then there is the rest of the world. At present, [a]t least 86 jurisdic-
tions have premerger notification regimes,
196
many of them instituted in the
last few years. In many developing countries, economic growth (as opposed
to short-run consumer welfare) ranks high among the priorities for the anti-
trust regime. Merger-generated efficiencies may receive a more cordial
reception in jurisdictions eager to stimulate industrial development. The
symmetry principle may first take root outside the traditional antitrust re-
gimes.

196. Fox & Crane, supra note 14, at 302.
Crane FTP3 B.doc 10/28/2011 10:34 AM

Rethinking Merger Efficiencies

Uploaded by

Copyright:

Available Formats

Rethinking Merger Efficiencies

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Rethinking Merger Efficiencies

Uploaded by

Copyright:

Available Formats

Crane FTP3 B.

doc 10/28/2011 10:34 AM

You might also like