Evaluating vertical mergers: a post-Chicago approach

Article Abstract:

The post-Chicago approach to vertical integration acknowledges, as the Chicago School asserted, that procompetitive effects can result from vertical mergers, but it also scrutinizes such combinations for anticompetitive effects other than loss of efficiency. Other threats to competition include evasion of price discrimination laws, information exchange problems and foreclosure of access to inputs and market segments. Post-Chicago analysis is more fact-based, as well, and is not based on simplified economic models that assume that market failure are absent.

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Comment: is there new thinking on vertical mergers?

Article Abstract:

Critics of the lack of judicial scrutiny of vertical mergers in the 1980s have not succeeded in demonstrating empirically the anticompetitive effects of vertical integration. The focus of analysis should be the effect on downstream prices because without price increases there will be no anticompetitive effects. The per se legality of vertical mergers that emerged in the 1980s may not be the best means of approaching mergers, but changes in policy should be supported by evidence of harm.

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Evaluating vertical mergers: reply to Reiffen and Vita comment

Article Abstract:

Per se rules of legality and illegality are both inappropriate for antitrust analysis of vertical mergers. The facts should be considered to determine the impact in individual cases. Analysis should focus on the post-merger effects on competition in the relevant market as well as market conditions before the merger is completed. Sound policy would strike down anticompetitive mergers while allowing those with efficiency justifications to proceed.

Criticism and interpretation, Reiffen, David, Vita, Michael

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