18 - Horizontal Merger Policy

Summary

In this chapter, we review the tools and tactics competition authorities use to evaluate the competitive consequences of mergers using various examples. Merger policy in the United States is governed by Section 7 of the Clayton Act, which forbids mergers that are apt to impair competition or tend to create a monopoly. Since Section 7 is a preventive – rather than a remedial – provision, the antitrust Agencies need not demonstrate actual harm. The Agencies need only prove that the adverse effects are likely to accompany that merger. A careful review of the change in the market structure before and after the proposed merger is often employed to determine the likelihood of an adverse effect. We illustrate the Agencies’ methodology by looking at mergers of health insurers, physician groups, and pharmaceutical companies.