Economic Theory and Competition Law
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Economic Theory and Competition Law

Edited by Josef Drexl, Laurence Idot and Joël Monéger

The context for this book is the increasingly complex relationship between economic theory and competition law which gives rise to lively political and academic debate on the direction competition law should take in a more global and innovation-oriented market place.
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Chapter 12: Efficiencies in Merger Analysis: Alchemy in the Age of Empiricism?

Thomas L. Greaney


12. Efficiencies in merger analysis: alchemy in the age of empiricism? Thomas L Greaney* 1 INTRODUCTION One is hard-pressed to find in law an undertaking more fraught with uncertainty than the application of the efficiencies defence in merger analysis. Generalist fact finders (judges) and politically attuned government officials (prosecutors and regulators) are charged with two Herculean tasks: (1) predicting the outcome of organic changes in business enterprises and (2) comparing the magnitude of those changes to the equally uncertain amount of harm to future competition that the transaction will cause. Given the enormous, perhaps intractable, uncertainty of this inquiry, it is therefore paradoxical that many of the strongest advocates for strengthening the role of efficiencies analysis in merger reviews are self-described proponents of bringing a ‘new empiricism’ to antitrust analysis.1 This chapter focuses on the tensions inherent in incorporating an efficiencies defence (or evaluating efficiencies as part of the appraisal of mergers) and maintaining the rigour and impartiality promised by proponents of the ‘empirical’ approach. This argument should not be misconstrued as a brief for abandoning the efficiencies inquiry altogether. Rather, it is, first, an appeal for candour (and humility) by those undertaking the inquiry; and second, it is a brief for constraining discretion by imposing * Chester A. Myers Professor, Saint Louis University School of Law. 1 For example, former FTC chairman Timothy Muris has contended that merger law should not rely on presumptions and economic theory alone. Questioning presumptions that increased concentration...

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