Suchergebnisse

Mid-1960s Supreme Court decisions undermined the rule of law by giving the government unbridled discretion in enforcing Section 7 of the Clayton Act. Since 1968, the government has promoted the rule of law through guidelines limiting discretion. The Vertical Merger Guidelines, however, place no meaningful limits on agency discretion. They articulate theories under which mergers can be harmful but neither specific nor general standards. They set out no principles for determining when a merger harms competition, rather than a competitor, and no criteria for determining when harm to competition is likely, rather than merely possible. Nor do they convey the agencies' general attitude toward vertical mergers.

Key insights on the unilateral competitive effects of mergers derive from economic models built on behavioral assumptions and mathematical regularity conditions ensuring that merger effects are determined by the premerger margin of competition between products combined. But the usual behavioral assumptions and regularity conditions might not hold for prescription drugs, and the usual insights might not apply. Analysis of a simple model based on the facts of FTC v. Lundbeck shows that weak competition between two therapeutic substitute drugs plausibly results in monopoly prices, so merging them has no effect on their prices.

Lande and Davis defend their claim that private damages actions are a greater deterrent than criminal cartel enforcement but continue to miss two key points: Incarcerating individuals deters cartels in a manner that no financial penalty can, and cartel deterrence requires the detection tools available only in criminal enforcement.