The 2010 Horizontal Merger Guidelines After 10 Years

Article Source: Review of Industrial Organization, Vol. 58, No. 1, pp. 1-11, 2021
Publication Date:
Time to Read: 2 minute read
Written By:

 Joseph Farrell

Joseph Farrell

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The 2010 Horizontal Merger Guidelines outline the main analytical methods used by the Department of Justice (DOJ) and the Federal Trade Commission (FTC) in analyzing mergers and acquisitions involving competitors.


Policy Relevance:

Many scholars consider the 2010 Guidelines a success.


Key Takeaways:
  • The Clayton act prohibits a firm from acquiring another firm if the merger might tend to create a monopoly; the DOJ and the FTC review major mergers in advance.
  • Antitrust cases and enforcers have embraced the consumer welfare standard, and equate a substantial lessening of competition with substantial harm to consumers.
  • Antitrust authorities recognize that mergers involve a fundamental tradeoff; every merger eliminates competition between the merging firms, but might create a single firm capable of competing strongly against other firms.
  • The 2010 Guidelines gave agencies more flexibility in defining the relevant market in which the merging firms compete.
    • To avoid defining the market too narrowly, the 2010 Guidelines provide that agencies need not confine themselves to evaluating competition in a single relevant market.
    • To avoid defining the market too broadly, the 2010 Guidelines note that agencies usually consider concentration in the smallest relevant market.
  • A review of the 2010 Guidelines from the FTC’s perspective notes the difference between how mergers are investigated and how they are evaluated in court; the FTC looks for direct evidence of the effect of a merger on competition, but in court the emphasis is on market definition and market share, indirect structural evidence of the merger’s effect.
  • The 2010 Guidelines fostered skepticism that competition lost because of a merger will be replaced by new entrants.
  • Some observers propose reducing the burden of proof on government to prove that a merger will tend to lessen competition.
    • They propose a presumption against mergers that put upward pressure on prices over ten percent.
    • They propose that enforcers closely scrutinize mergers involving firms that might compete in the future.
  • Other observers support the arguments firms tend to use in defending mergers.
    • They propose giving mergers a safe harbor when the market has many significant competitors.
    • They conclude that high market shares support only a weak presumption of harm.
    • They conclude that the standard tools used to measure the upward pricing pressure that will result from a merger are overused.



Carl Shapiro

About Carl Shapiro

Carl Shapiro is the Transamerica Professor of Business Strategy at the Haas School of Business, and Professor of Economics in the Economics Department, at the University of California at Berkeley. His current research interests include antitrust economics, intellectual property and licensing, patent policy, product standards and compatibility, and the economics of networks and interconnection.