P's theory of harm
Merger Guidelines 2-6 provide possible theories: 2, 3, and 5 receive the most attention from courts (although courts still aren’t very receptive to these theories) – P can bring multiple theories
(2) Unilateral competitive effects: “eliminate substantial competition between firms” (horizontal)
(3) Coordinated competitive effects: “increase risk of coordination” (horizontal or vertical)
- E.g., merger makes policing a cartel easier
(4) “Eliminate a potential entrant” (horizontal or vertical)
(5) “Lead to exclusion of rivals” (main vertical theory, also horizontal): really any merger between complements that creates the possibility of exclusion
- E.g., Time Warner merger created greater potential for exclusion of other distributors and content creators by merging TW’s content with AT&T’s distribution
(6) “Entrench or extend a dominant position” (horizontal or vertical):
- Vertical: typically involves something like a tie
- Extend: use power in one market to buy into a complementary market, extending power into the complementary market (e.g., Microsoft tying browser to OS to preserve power in OS market)
- Entrench: if Microsoft purchased all the browsers, that would entrench their position in the OS market
- Purpose: stop monopoly in its incipiency
- Merger Guidelines 7-11 provide evidence to support possible theories:
(7) Trend toward consolidation
(8) Series of acquisitions
(9) Platforms
(10) Competition between buyers
(11) Partial ownership