This paper explores the use of collusion theories in merger analysis at the U.S. Federal Trade Commission (“FTC”). The 1992 Merger Guidelines (“Guidelines”) focused more on unilateral effects concerns, relegating collusion analysis to a second-tier theory. That said, both structural and behavioral conditions conducive to establishing or maintaining an arrangement to restrict competition were listed in the Guidelines to structure collusion analysis. This paper undertakes a systematic review of 75 merger decisions to identify the conditions that increase the likelihood of a collusion finding. Standard structural concerns are readily identified, while behavioral factors defy characterization. The results of the analysis also support a Folk Theorem in which structural concerns are validated with some type of performance evidence. Further work finds that allegations of maverick conduct add little to the analysis, while the Bush administration appears to have been slightly more likely to identify a collusion problem than the Clinton administration.
Reprinted from the CPI Journal, Autumn 2008, Volume 4 Number 2