Should Merger Policy Be Changed? An Antitrust Perspective

Over the past 15 years, a revolution has occurred in U.S. merger policy. ~ Antitrust attacks on non-horizontal mergers have all but disappeared. Regulation of horizontal mergers now starts from the presumption that "the vast majority of horizontal mergers pose no market power problems and should simply be approved rapidly" (Schmalensee 1987, p. 44). In February 1986, the Reagan adminisration urged Congress to codify the new interpretation of Section 7 and to mandate consideration of a merger’s salutory effects on economic efficiency.2 If former Commerce Secretary Baldridge had had his way, the Administration would have sought complete repeal of the antimerger law. Reversal of the conventional wisdom on mergers can be traced to acceptance of Robert Bork’s views on the subject. In large measure, the case for the status quo rests on the soundness of his position. As a result, I shall discuss that position in some detail. Finding it deeply flawed, I then propose a research agenda for those who doubt the adequacy of current enforcement. I begin, however, with a brief discussion of the U.S. Supreme Court opinion that did so much to inspire retreat from an activist policy stance.