The Proper Role of Privacy in Merger Review

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Darren Tucker, May 29, 2015

There have been increasing calls for the Federal Trade Commission and U.S. Department of Justice to consider the potential loss of consumer privacy as a factor in their merger reviews and to challenge mergers of firms with large stores of personal data that otherwise pose no apparent competitive issues. These calls are unlikely to be successful. Standalone privacy concerns cannot be factored into the merger review process in a way that is consistent with the antitrust statutes and existing precedent. There are also good policy reasons against incorporating traditional privacy concerns into antitrust doctrine.

Nevertheless, in industries where firms differentiate themselves through their approaches to privacy, a merger could reduce the incentive of a merged entity to compete on this basis. A substantial lessening of this competition could be a basis on which to block a proposed transaction. Still, the number of transactions that will raise serious concerns about loss of privacy competition is likely to be very limited even in digital markets.