Doomsday Mergers: A Retrospective Study of False Alarms

By Brian C. Albrecht, Dirk Auer, Eric Fruits & Geoffrey A. Manne, (ICLE)

A well-placed cadre of progressive scholars and advocates — several of whom have in more recent years come to occupy top positions in America’s antitrust agencies — have long-focused their attention distinctly on high-profile mergers and acquisitions. For more than a decade, hardly a deal could be proposed without these critics claiming that it would create an unassailable monopoly, be the final nail in the coffin of small businesses, and/or cement the political sway of big business. For these so-called “neo-Brandeisian” critics, the repeated pattern has been, first, to entreat authorities to block these deals and then, should they be cleared nonetheless, to cite such approvals as evidence that U.S. antitrust law is in dire need of reform.

The bombastic rhetoric employed by these critics stands in sharp contrast with the technocratic and measured approach to enforcement that has traditionally been the norm for U.S. antitrust agencies and courts. Indeed, for better or worse, antitrust case law in the United States generally focuses on tangible and short-term metrics, rather than hypothetical doomsday scenarios that are notoriously hard to predict. Under this measured approach — rooted in the consumer welfare standard — theories of harm are dismissed if they rely on mere conjecture. Unsurprisingly, the critics have routinely lambasted this status quo.

But the paradigm has been shifting. With the elevation of progressive critics such as Lina Khan to chair the Federal Trade Commission (FTC), Jonathan Kanter to head the U.S. Justice Department’s (DOJ) Antitrust Division, and Tim Wu to serve as special assistant to President Joe Biden for technology and competition policy, the tide of U.S. antitrust enforcement may be turning. In recent months, the antitrust agencies have brought several high-profile suits that seek to combat what their new leadership believes to be excessive corporate consolidation. This includes the FTC’s failed challenge of the Meta-Within deal, as well as ongoing cases against the Microsoft-Activision Blizzard and Illumina-Grail mergers.

The rhetoric accompanying these challenges has departed significantly from traditional antitrust discourse and has instead been more closely aligned with the populist style that these agencies’ leaders employed before their nominations. For instance, in its Meta-Within complaint, the FTC argued that clearing the deal would put Meta “one step closer to its ultimate goal of owning the entire ‘Metaverse.’” In the Illumina-Grail suits, the agency claimed that “after the Acquisition, Illumina will control the fate of every potential rival to Grail for the foreseeable future.”

Against this backdrop of increasingly alarmist merger claims, this paper analyzes whether previous doomsday merger scenarios have materialized, or whether the critics’ claims missed the mark. Our retrospective analysis shows that many of the alarmist predictions of the past were completely untethered from prevailing market realities, as well as far removed from the outcomes that emerged after the mergers.

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