Law and Economics
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In the United States, mergers are typically challenged under Section 7 of the Clayton Act, which prohibits transactions “where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.” The merging parties’ premerger notification obligations to the antitrust agencies are governed by the Hart-Scott-Rodino Act, whose filing requirements are triggered when the value of the transaction exceeds certain dollar thresholds.
EI economists have more than 100 years of combined employment experience at the Department of Justice and the Federal Trade Commission, and frequently serve as private consultants to merging parties. With this first-hand experience, EI understands the concerns and requirements of antitrust enforcement officials. EI can assess the likelihood of government involvement in a contemplated action, enabling clients to make well-informed strategic decisions. EI’s expertise and experience encompasses all phases of the process, including assessing the antitrust risk of proposed merger, navigating discovery procedures, and describing the likely competitive effects of a transaction before competition authorities in the US and internationally. By focusing key issues in a timely manner, EI presentations of economic arguments to the enforcement agencies have helped to terminate merger investigations before the “second request” phase.
EI economists apply rigorous analytical methods to complex data, including merger simulation techniques (game-theoretic models that yield quantitative predictions of competitive effects) advocated in the 2010 Horizontal Merger Guidelines. EI economists apply these methods to evaluate the likely effects of proposed mergers on prices, costs, and competition, while accounting for divestitures, merger-driven efficiencies, product repositioning, and other factors.
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