Contemporary merger guidelines are heavily dependent on empirical observations of past and present markets. This feature makes the guidelines inadequate for addressing market power in the dynamic high-tech industries. Competition regulators should redirect merger policies towards focusing on industry features that do or that will create market power – i.e. protect firms from competitive pressure – and then adopt policies that challenge mergers that would extend the reach of such monopoly-inducing features. Antitrust strategies for diminishing the presence of such features to the extent practicable would also be in order.

By Mark A. Jamison[1]

 

I. INTRODUCTION

Companies engage in mergers for many reasons, including to respond to deregulation or to technology change, or because of a desire to achieve scale or acquire resources.[2] Another reason is to eliminate existing or potential competition in specific markets.[3] Because of this potential of lessening competition, antitrust regulators scrutinize and potentially stop mergers that, in their opinions, have a high likelihood of decreasing competition to the harm of consumers.[4]

Merger analysis is generally a two-step process where, first, the competition authority defines the markets where the merger might increase power – i.e. the ability to avoid competitive pressure – and second, whether the merger does indeed result in greater market power to the harm of consumers.[5] The first step is data intensive

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