Jump to ContentJump to Main Navigation
Competition and the State$

D. Daniel Sokol, Thomas K. Cheng, and Ioannis Lianos

Print publication date: 2014

Print ISBN-13: 9780804789394

Published to Stanford Scholarship Online: September 2014

DOI: 10.11126/stanford/9780804789394.001.0001

Show Summary Details
Page of

PRINTED FROM STANFORD SCHOLARSHIP ONLINE (www.stanford.universitypressscholarship.com). (c) Copyright Stanford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in SSO for personal use. Subscriber: null; date: 04 July 2020

What Drives Merger Control?

What Drives Merger Control?

How Government Sets the Rules and Play

Chapter:
(p.89) Chapter 5 What Drives Merger Control?
Source:
Competition and the State
Author(s):

D. Daniel Sokol

Publisher:
Stanford University Press
DOI:10.11126/stanford/9780804789394.003.0006

Abstract and Keywords

This chapter identifies three related topics that address the extent to which political factors should be recognized: within antitrust, outside of antitrust law as part of merger control, and how these two analyses interact. This chapter offers analysis of these themes along with case studies of each issue to operationalize these issues in real-world settings.

Keywords:   mergers, antitrust, competition law, public choice, antitrust goals

Merger control is one of the most important functions of antitrust/competition law. It is the mostly ex ante review to correct for potential anticompetitive behavior through either unilateral or coordinated effects. Mergers tend to be high stakes, and some of the very nature of what might make a merger attractive from a competition perspective, such as efficiencies, might have negative repercussions with regard to noncompetition economic interests such as employment and loss of a national champion or noneconomic political factors such as diversity of choices.

As with antitrust more generally, the number of jurisdictions with a merger control regime have expanded quite rapidly in the past two decades. At present there are in excess of 90 jurisdictions that maintain some level of antitrust review over mergers under their antitrust law. A number of other jurisdictions may lack specific formal merger control powers under antitrust law but may still review mergers under sector-specific regulation, national security regulation, and other non-antitrust review. In the jurisdictions with formal antitrust review, often this review may be concurrent with non-antitrust review.

The state shapes its merger control regime in two fundamental ways. The first is the extent to which noncompetition economic factors may be considered by the antitrust merger system and what remains outside the purview of antitrust (such as sector regulation). The second is the set of assumptions within competition economics that shape both merger control rules and outcomes. (p.90) What exactly is and should be the criteria and outcomes for state intervention used in merger control remain open questions around the world.

We begin with the use of an antitrust specific merger control regime. The implementation of merger control may lead to significant tensions domestically. A merger control system based on competition economics may be at odds with policies not based upon competition economics. Issues such as foreign ownership, efficiencies (which may include job losses), and competition economics that may diverge from “industrial policy”1 of a given country may exacerbate situations in which politics may play a larger role in antitrust either implicitly or explicitly.2 By politics, this chapter examines issues from the lens of public choice. Politics mean factors that impact merger control are not driven by the latest analysis of neutral competition economics within antitrust decision making. This chapter argues that for purposes of optimal antitrust enforcement in terms of outcome, predictability, and administrability, the setup of antitrust should be designed so as to remove as much of the overt and implicit political choices from antitrust as possible. Instead, these political choices should be made by other parts of government, such as the executive or through legislative fiat. Put differently, antitrust should become as technocratic (based on the latest developments within competition economics) as possible. To do so in any given jurisdictions, it faces certain challenges from both within antitrust and outside competition law.

This chapter identifies three topics related to the extent to which political factors are and should be recognized: within antitrust, outside antitrust law as part of merger control, and how the two analyses interact. This chapter offers an analysis of these themes, along with case studies of each issue to operationalize these issues in real-world settings.

I. The Nature of Political Intervention within Merger Control

The reasons a merger may be blocked by antitrust authorities can have competition economics justifications or some other justifications. In some instances preventing a merger may be based on a particular view of dynamic competition within competition economics, which holds that unless competitors are adequately protected, competition itself will eventually be undermined and consumers will be injured in the long run. In other instances this is based on the view that merger control has substantive objectives beyond competition, such as the protection of employment or preservation of social stability.3

(p.91) The most important factor that impacts how much government intervention there is within merger control is whether to make competition economics / industrial organization the sole factor to determine whether to permit a merger. A regime that makes economic analysis the sole standard of merger control will be a far more permissive merger control system than one that examines noncompetition economics factors because a market-based system will be the default that will shape the permissibility of mergers.4

An industrial organization economics-based merger control system removes significant discretion from the merger control system. From a normative standpoint, this is probably for the best because the incorporation of fairness-related concerns in the merger analysis process may lead to results that hurt consumers because “fairness” is highly variable in its meaning. Areeda and Turner described fairness concerns within antitrust concerns as “a vagrant claim applied to any value that one happens to favor.”5 More generally, Kaplow and Shavell suggest:

[A]dvancing notions of fairness reduce individuals’ well-being. By definition, welfare economic analysis is concerned with individuals’ well-being, whereas fairness-based analysis (to the extent that it differs from welfare economic analysis) is concerned with adherence to certain stipulated principles that do not depend on individuals’ well-being. Thus, promoting notions of fairness may well involve a reduction in individuals’ well-being.6

Embracing antitrust industrial organization (described herein as competition economics) allows for greater predictability and for outcomes that are less likely to be hijacked by overtly political concerns not based on competition economics.

Several advancements have been made in economics as they relate to merger control that push toward a more technocratic, less overly political antitrust. They include more sophisticated models of unilateral effects,7 coordinated effects,8 merger simulation,9 efficiencies,10 and upward pricing pressure.11 When a merger control system focuses on these issues, the implication is that issues such as saving local jobs or protecting smaller competitors for the sake of keeping less efficient competitors in the market play perhaps no role.

Given the nirvana fallacy, this chapter does not suggest that competition economics create a new framework for undertaking merger analysis to incorporate other economic concerns or noneconomic fairness concerns. Rather, the latest developments of competition economics should frame the development (p.92) of merger control. Overtly political interventions should be moved to those areas of regulation in which alternative frameworks and trade-offs are commonly accepted.

A number of factors account for noneconomic goals in the practice of competition law for merger review. Some of this is due to particular language in the enacting legislation that provides for multiple and sometimes competing goals. These goals may create a path dependency in case law regarding the implementation of merger law. Moreover, even if the statute is silent or has some sort of efficiency justification, the case law may reflect some noneconomic approaches rather than agency thinking based upon competition economics.12 There are also situations under both competition law and competition agency analysis in which sophisticated economic theoretical and empirical work and approaches may be ignored or marginalized depending on the particular case. This may be a more implicit political version of merger control in which the agencies strategically pick and choose the economics to adopt based on the outcome they want.13 In this setting, the state plays a formative role in shaping policy but in a less obvious way than if a sector regulator was to ignore the lack of any negative competitive effects in a decision to block a merger based upon noneconomic factors such as under a “public interest” standard of review.14

In some systems, competitor effects still have some salience in merger analysis. Yet, at some level, this focus on competitors rather than on competition is a form of industrial policy because it may favor outcomes inconsistent with either total or consumer welfare. While few merger control systems worldwide assign significance to protecting competitors, some regard protection of competitors as a legitimate concern in their antitrust merger review regarding case outcomes.15

The trade-offs between economic and noneconomic goals are not the only set of political trade-offs that the state shapes in its antitrust analysis. Even within a purely competition economics framework, there is a political element to the use of economics. The choice as to the standard used regarding how to assess the effects of a merger is political. The two competing economics-based choices within competition economics are consumer welfare and total welfare. In simple terms, consumer welfare means the effect of the merger on consumers, whereas total welfare is the effect of the merger on both consumers and producers. In many antitrust cases, there is in fact no difference in outcome regardless of the welfare standard.16 Most mergers that harm consumer welfare will also harm total welfare, such as a merger to monopoly. However, as we (p.93) discuss below, in some merger cases the welfare standard matters in terms of outcome.

The difference in outcomes can be seen through the example of the use of efficiencies in mergers. Williamson first identified the efficiency trade-off raised by merger-specific efficiencies that may accompany an increase in monopoly power postmerger.17 There are some instances in which a business practice improves efficiency—that is, reduces costs of production and/or distribution. We set up two basic hypotheticals to illustrate the problem. The easy case is one in which the merger does not enhance market power. As a result, cost savings from the merger will be passed on to some extent to consumers in the form of lower prices. This case is easy because the merger increases both consumer welfare and total welfare. The more difficult case occurs where the improved efficiency accompanies increased market power postmerger that leads to a price increase above the previous level. This situation creates a need to weigh the benefits of improved efficiency against the costs of allocative inefficiency, since on total welfare grounds this merger should be allowed, whereas on consumer welfare grounds it should not.

This situation illustrates the political reason that agencies may choose consumer welfare over total welfare as the basis for an economic analysis of mergers. The political backlash against antitrust policy would be significant under the following circumstances (the hard case): there are job losses and price increases postmerger even though total welfare increases. It is for situations such as these that we suspect that antitrust agencies do not adopt a total welfare standard, even in cases in which economists rather than lawyers head competition authorities due to a fear of lack of funding or of a reduction in the powers of the agency as a result of allowing such mergers.18

The decision for a merger regime of its welfare standard also has other impacts regarding the play of merger control. Once an agency decided upon either a total or consumer welfare standard, this creates a certain amount of lock-in regarding the agency’s discretion. Certain challenges will be brought or not brought based on the likelihood of success on the merits based upon the merger standard.

In practice, changing enforcement practices for mergers across political regimes is not easy. To a large extent, merger policy is dependent on the particular matters that parties notify to the antitrust authorities. Issues like general economic climate and the strength of the economy will impact the number of merger filings. Other issues such as industry consolidation based on specific industry conditions also impact the opportunities for merger challenges. Finally, (p.94) judges may be reluctant to change substantive merger law. Together, the political choice that the state makes in its merger standard has a lasting impact on the play of competition policy in a given jurisdiction. Therefore, the choice of economics means less overt political antitrust.

Just as there is an implicit political choice in picking the welfare standard used to analyze mergers, there is a similar implicit political choice as to the aggressiveness of merger enforcement. Yet, on the margins, a shift in administration of an antitrust agency may impact the agency’s enforcement posture and how much the state may be willing to support merger enforcement. In this sense, government has the ability, potentially, to decide the temperature of enforcement. That is, government may decide that merger enforcement is too lax or too strong and may shift its enforcement resources as a result of its own preferences for enforcement. This is a political decision, even if done through the lens of competition economics.

Case Study I: United States

Perhaps more than any other antitrust system, the United States’ experience with merger control has shown the most dramatic shift in terms of the change from overt political factors to one guided solely by competition economics considerations. The use of merger control in antitrust has been a U.S. export, although the transplant has been different across jurisdictions based on a number of factors. Nevertheless, the long time span of U.S. merger policy and the particular embrace of competition economics illustrate the different tensions of “political” antitrust and how the state shapes antitrust merger enforcement both in terms of explicit and implicit political intervention that has some broader lessons for other merger regimes.

The changes in the United States reflect a similar transition (although in many cases not as far along) in other jurisdictions as to politics in merger control in which technocracy using the latest methods in industrial organization suggest the least political intrusion specific to competition economics into competition policy.19

The U.S. experience with regard to the politics of merger control and the potential of shifting political forces on enforcement provides a case study to address how much antitrust agencies can do to change the dynamics of merger enforcement. The U.S. merger regime has been the most studied merger system. Moreover, the U.S. merger regime is the most technocratic in the sense that economists play a significant role in the merger review process within the (p.95) agencies and with the parties each utilizing economists to make arguments based upon the economic arguments laid out in the merger guidelines.

Given the current state of competition economics, U.S. merger enforcement and case law from the 1950s and 1960s are intellectual embarrassments. The agency priorities and case law reflected the idea that big was bad, that merger efficiencies should play no role in merger analysis, and that the protection of competitors mattered more than efficiencies. Put differently, overt noneconomic political factors mattered within antitrust.20 This approach in the case law began to change in the late 1970s, although the change specifically in merger case law lagged a bit relative to the abolition of per se rules regarding conduct.21 Such overt political antitrust considerations (those not based on competition economics) are no longer part of the current antitrust policy discourse within the case law or agency practices as embodied in the merger guidelines. As Judge Ginsburg has noted in the case law development:

Even in such cases where there is no consensus among economists, there is, nevertheless, virtually universal agreement among antitrust economists and lawyers alike, that the Court should answer questions of antitrust law with reference to economic competition—matters of consumer welfare and economic efficiency—rather than make political judgments about such economically irrelevant matters as the “freedom of traders,” or “the desirability of retaining ‘local control’ over industry and the protection of small businesses.”22

Changes in priorities became embedded not merely in the case law but also in the agencies with the rise in the importance of economics. In terms of how the incentives impact the role of the state in merger control, discretion in the hands of lawyers will play out differently than that of economists because it will go to questions of how central economic analysis will be in case selection. Froeb and colleagues explain the role of the economist as follows: “Economic methodology is particularly well suited for predicting the causal effects of business practices and for determining the effects of counter-factual scenarios that are used to determine liability and damages.”23 If this analysis is the basis of enforcement decision making, it focuses on effects. In this sense overt political control can be removed from case analysis because it is guided more by empirics. This is not to say that economists are not subject to political motivation. However, economists exercise it less than lawyers because populism was never part of industrial organization’s mantra.24 Lawyers, as part of an investigative team, may be less driven by the empirics of economics. More overt political (p.96) goals might come into play in their analysis. The greater institutionalization of economics as the central motivation for merger control may have been a causal factor that changed the role of non-antitrust government intervention in merger control and a move away from political antitrust.

Empirical work suggests that overt noncompetition economics-based politics has, for the most part, become a nonissue in U.S. merger enforcement in recent decades. As one economist notes, “Populism was forced to a fringe position.”25 Earlier studies of U.S. merger control that examined the 1980s suggested that there were noneconomic factors at play in merger control.26 The same work also found that the recommendations of economists carried less weight than those of the lawyers. A greater role for economists merely shifts “political” antitrust from noneconomic politics to politics within economics and the role of the state in merger control. This is implicit politics because both lawyers and economists behave politically, and some are the same in terms of their private incentives.27

The quantitative work on the death of overt political antitrust in merger control has been challenged by two sets of critiques that suggest that overt politics still play a role. In these critiques, the state continues to play an overt political role to shape merger enforcement. The first critique is based on a small sample of case studies. One of the harshest critics of “political” enforcement in the United States in recent years has been Robert Pitofsky, who chastised enforcement under the Bush administration as overly lax due to an ideological shift toward strong adherence to Chicago School principles. In a book on Chicago School antitrust, Pitofsky wrote, “The decline of antitrust enforcement against mergers between direct rivals (‘horizontal mergers’) [under Bush] is the most pronounced and unfortunate effect of the influence of Chicago School economics.”28 Given Pitofsky’s hostility to changes after his tenure at the FTC as chairman, what is striking is how close Pitofsky’s own enforcement policy was to that of those undertaken by antitrust enforcers under the Bush presidency that preceded and followed his tenure under Clinton.29 Moreover, Pitofsky’s own vision of antitrust articulated in the late 1970s was one in which noneconomic factors should play a role in antitrust enforcement. Yet, as chairman of the FTC, Pitofsky did not allow such nonpolitical factors to play a significant role, and merger control in the late 1990s looked more like the early 1992s or early 2000s than the mid-1970s, or even the mid-1950s, in which government enforcement of merger control was more significant. Pitofsky was constrained significantly because of the technocratic shift within the practice (p.97) of merger law and changes in case law due to this shift (as embodied under the merger guidelines) that prevented a return to an earlier, more political antitrust.

The other critique suggesting overt political U.S. merger enforcement has come from Carl Shapiro and Jonathan Baker, who offer both quantitative and qualitative critiques of political enforcement. In work that had significant policy traction, Baker and Shapiro undertook a study of mergers under the George W. Bush administration and made the claim that under the Bush administration there was underenforcement of mergers. They claimed that this was particularly true for the Department of Justice than for the Federal Trade Commission.30

However, most recent empirical studies that analyze more recent merger enforcement note that across both Republican and Democratic administrations over the past 20 years, merger policy has remained constant—that is, at least since the George H.W. Bush administration.31 Practitioner survey empirical work also backs up a nonpolitical U.S. antitrust system, even under the George W. Bush administration.32

How does one explain the transformation in the United States to significantly reduce overt political considerations (and thus the role of the state) within antitrust merger policy? The U.S. experience is worth noting as an example for other jurisdictions, even those with significantly different institutional designs, largely because the important changes that the United States implemented. This includes the creation of a distinct group within the antitrust agencies of economists, including a chief economist and staff, who are not subordinate to the lawyers.33 This institutional design allows for a distinct economic voice to influence case selection and analysis to help ensure that there is an economic basis for enforcement decisions.

An additional factor that has changed the approach of the U.S. antitrust agencies to one that is more economics based and technocratic (and thus less overtly political) has been the introduction of economically informed merger guidelines that have been copied in many of the world’s jurisdictions. The guidelines have prevented the worst excesses of noneconomically rigorous merger enforcement such as Von’s Grocery,34 perhaps the worst merger decision of all time. The importance of the merger guidelines to antitrust analysis of mergers and the use of various economics theories and approaches have been tremendous, and there has been an iterative process of tweaking the guidelines as the economics of the time have advanced. This has been true in the United States with each iteration of the merger guidelines—1968, 1982, 1984, 1992, 1997, and 2010.35

Case Study II: Europe

(p.98) Explicit politics plays a significantly smaller role now than before in European merger analysis. Some of the reasons look very similar to those of the United States, such as developments in case law, the move to a greater “effects-based analysis” that relies more heavily on economics, and the institutionalization of greater economic analysis within DG Competition.36

How Europe got to the point of a less active intervention by the state into competition policy is an interesting story. Some have argued that at the Commission level, the 1989 Merger Regulation eschewed industrial policy concerns.37 However, Europe has become more technocratic in its merger control only more recently.38

Historical factors and path dependency explain the greater orientation toward industrial policy of EC merger control. The core of European competition law was to further market integration over other factors such as efficiency. This meant that efficiency (however defined) played a lesser role in the original formulation of European competition law. One might suggest that a reading of De Havilland / Aerospatiale, a merger case in 1991 soon after the 1989 merger rules were put into place, about the failing firm defense expressed the tension between industrial policy and competition policy, at least regarding the appropriate use of efficiencies in the failing firm defense context.39 Put differently, in the early years of the merger regime these overt political factors were more central to European merger policy than is the case today.

Because lawyers played a significant role in merger enforcement, while economists played a minor role, the Commission’s decisions to challenge mergers may have lacked a rigorous economic justification. This too has changed due to the institutionalization of greater economic analysis, including the creation of a chief economist and an economics staff not subordinate to lawyers, as well as a series of cases that reversed Commission challenges based upon insufficient economic analysis.40

The earlier case law and institutional approaches have impacted on the current structure and nature of merger enforcement in Europe in terms of state intervention. Quantitative research supports that at present, Europe is a stricter enforcer of merger regulation than the United States.41 Path dependency and earlier nonefficiency legacy may play some role in this orientation toward greater enforcement. One could frame Europe’s wariness regarding vertical restraints (including vertical mergers) as an expression of this same sort of legacy.42 Thus, more aggressive European challenges on mergers that are vertical may be as much political (based on a concern for the competitive process)43 (p.99) as economic and a key difference with the United States on competition law and economics.

A second factor that seems to have impacted the development of noneconomic factors in European merger control was what some claimed was an anti-American bias. Empirical work that analyzes this earlier period found that there was protectionism involved in European merger control. DG Competition had a higher probability of intervention against non-European firms when there were European competitors in the same market.44 In more recent years, empirical work on merger challenges suggests that the protectionist approach seems no longer to be the case at the level of DG Competition.45

This rift between Europe and the United States came into play in particular in the late 1990s and early 2000s. A number of high-profile cases before structural changes in the mid-2000s suggest that industrial policy or other political concerns may have been at play that led to particular decisions. These included most notably Boeing / McDonnell Douglas,46 GE/Honeywell,47 and Oracle/PeopleSoft.48 This chapter focuses on GE/Honeywell because it illustrates how politics both explicitly and implicitly led to divergent outcomes between Europe and the United States. Oracle/PeopleSoft, also discussed, illustrates a situation in which the political dimension may have trumped economics-driven merger analysis to prevent a different enforcement outcome between Europe and the United States.

We begin with a short review of GE/Honeywell.49 The proposed GE/ Honeywell deal received merger clearance in the United States but was blocked in Europe based on a theory of the bundling of GE’s engines with its financial services at a price that was below what its rivals could offer. Third-party complaints drove much of the hostility of the European Commission, but so did a different path dependency based on political considerations on the view of competition in Europe. European competition policy, at the time, was far more likely to be about the preservation of competitors than the United States. Thus, even if there were not some more overt public choice–related explanation for the strategic use of antitrust, the institutional factors also pushed DG Competition to block the deal in Europe and in effect to block the deal globally.50

In Oracle/PeopleSoft, the Commission approved the merger but did so using the same unilateral effects theory that DOJ had suggested to block the deal. Unlike Boeing / McDonnell Douglas and GE/Honeywell, the Europeans agreed with the market definition employed by DOJ and yet somehow still cleared the merger after DOJ had lost its merger challenge to the deal before a district court.51 This is puzzling, since if DG Competition accepted the DOJ (p.100) market definition, the three-to-two merger most probably should have been challenged by DG Competition.

Politics seems to have played a role in the decision not to challenge the merger in Europe. Because of the very thorough opinion that would have made an appeal incredibly difficult to win, DOJ decided not to appeal the ruling. Had economic analysis been at the forefront of the European decision making, this would have created a potential problem. By challenging a deal that could proceed in the United States, the Commission would only increase transatlantic tensions, just as Commissioner Monti’s term was to come to a close and just as efforts on best practices in the ICN for merger control were taking shape. These political factors seem to have been in play in the Commission’s decision to clear Oracle/PeopleSoft. DOJ’s loss in district court provided cover for the Europeans not to challenge the deal aggressively so that Commissioner Monti would not leave a political bomb for his successor Commissioner Kroes and another potential transatlantic rift.52

Case Study III: Member State–Level Politics in Mergers—Ireland

Merger control in Europe occurs not merely at the Commission level but at the member state level as well. Given smaller staffs overall and fewer economists than DG Competition, it may be more difficult for member states to be as advanced in their economics. However, institutional design issues also impact the politics of merger control at the member state level. The Irish system illustrates a change in the approach taken at the national level (for the better). Under Ireland’s original 1978 merger control regime, the Minister for Industry and Commerce could block or approve mergers and did not have to give a reason for doing so. Under Ireland’s Competition Act of 2002, merger control shifted to the Irish Competition Authority. The Competition Act required that a merger be blocked based on a substantial lessening of competition standard.

While there has been some disagreement as to the sophistication of the economics of the Irish merger control regime, the overt political nature of merger control has been removed. In its place is a more implicit set of assumptions over the nature of economic evidence. The ICA has given significant weight to both qualitative and survey evidence and in such cases made arguments that have not always employed the latest econometric tools of analysis.53 Because qualitative evidence may be more prone to manipulation, there may be some potential political element to its use. Yet, this sort of bias of evidence is more easily corrected than the naked political power play of noneconomic goals over (p.101) competition economics. Over time, the ICA will improve its economic analysis of merger economics and better integrate it into its merger practice.

Case Study IV: China

China’s merger control system is relatively new. China’s Anti-Monopoly Law (AML) was adopted by the People’s National Congress on August 30, 2007, and went into effect on August 1, 2008. Although China’s AML is based in substantial part on the established body of antitrust law in the European Union and the United States, the provisions of the AML reveal interesting ambiguities and uncertainties regarding some basic issues.

Article 27 of the AML lists the factors that may be considered when deciding whether to approve a merger: (1) market share and power, and market concentration; (2) the effect of market concentration on entry and technological innovation; (3) the effects on consumers and other related undertakings; (4) the effect on the development of the national economy; (5) and other factors as determined by the State Council Anti-Monopoly Enforcement Authority. Thus, the fourth and possibly fifth factors allow for MOFCOM to impose conditions that might not be based on traditional competition economics factors. To be sure, China is not the only system in which incorporation of such explicit noneconomic factors is possible but China’s merger control is a system in which these factors may be used extensively.

Legal policy of how the merger regime works in practice in China is not clear because few decisions have been made. Some of the emerging scholarship on Chinese merger control examines the existing structure and decided merger cases. Two recent articles reviewed MOFCOM’s decided cases to date and conclude that the structure is conceptually for the most part similar to that of the United States and Europe and that decided cases provide evidence that industrial policy considerations do not drive Chinese merger control.54 These studies have examined fewer than a dozen published decisions. Unfortunately, these decisions represent a small fraction of all mergers, and not all mergers approved with conditions have been published, which has created a selection bias effect to those studies.

In a separate research project, I surveyed nearly all of the Chambers-ranked non-PRC-based law firms about their China-related findings to determine the extent of the political (noneconomic) forces at play in merger control.55 A few insights from that study show how political Chinese merger control can be. The most important finding has to do with the direct intervention of other parts of government within MOFCOM’s merger review process. Other government (p.102) ministries need to sign off on merger approval. Many months can go by in terms of negotiations with MOFCOM and these other parts of governments (sometimes with the knowledge of the merging parties but not always). These other parts of government can have significant influence in putting certain conditions on the merger approval and may ask questions and force concessions of the merging parties that have nothing to do with competitive effects.

One important finding is the importance of third-party competitor complaints. If there is a Chinese company (particularly an SOE) that competes within the same relevant market or may at some point merely think of entering the market, the merger notification receives significantly more scrutiny. This is the case even if the competitive effects are negligible such that in other merger systems the deal would fall within a presumptive safe harbor because the market shares of the merging parties might be under 25 percent. As a result of these pressures, MOFCOM’s decisions at times have been attempts to frame political concerns within the language of economic analysis, even when the economic analysis undertaken is more rudimentary than what one might find in Western Europe or North America.

Case Study V: New Zealand and National Champions

What might create a situation in which there are potential welfare losses at home may be made up for in a merger context with total welfare gains due to greater efficiency regarding the export economy. New Zealand has an efficiency basis in its competition law as well as a goal of protecting the competitive process. In practice, New Zealand looks to a substantial lessening of competition test based on quantitative economic factors to determine if a merger should be approved.56

The stage was set when Cavalier Wood Holdings (CWH) acquired a competitor in 2010. CWH applied for and received merger clearance from the New Zealand Commerce Commission. The acquisition left only two players in the New Zealand market: CWH and another wool scourer (and wool wholesaler), New Zealand Wool Services International (WSI). In 2012, CWH applied for merger clearance from the Commerce Commission to acquire WSI. The Commerce Commission approved the merger, which was a merger to monopoly. Third-party respondents contested the merger, which the Commerce Commission approved and which was appealed to the High Court.57

The third parties argued that the merger to monopoly lessened competition and made an argument that to approve the merger was to favor an export-oriented industrial policy over consumer interests in New Zealand, which (p.103) would be harmed by the merger, since even by the Commission’s own conclusion, CWH would be able to impose a price increase of between 5 and 10 percent before new entry was likely.58 If the merger was approved, the implication by the third parties was that competition economics would take a secondary position to trade policy.

In fact, however, there was a competition economics–based reasoning that allowed for the merger to be upheld by the High Court. The Court found that there was a strong efficiencies argument in favor of the merger, given significant overcapacity in the industry and where the possibility of foreign entry would be a credible threat to price increases.59

II. Politics in Mergers Outside of Antitrust/Competition Law

The state may intervene in merger policy outside of antitrust by granting concurrent authority for merger approval to both antitrust and sector regulators. When there is overlapping regulation, this means a certain level of compromise so that the more interventionist regulator (usually the sector regulator) has an effective veto on a particular transaction being approved.60 Because of this possibility of asymmetrical bargaining power, the working relationship between sector and antitrust authorities may become strained. This is particularly so in those countries in which antitrust has become more technocratic and based exclusively on economic analysis and sector regulators who have both an economic and a noneconomic set of goals under a broader “public interest” mission.

A concern of the mixing of economic and noneconomic goals of regulation is that the mixture allows for more ready regulatory capture in the merger setting of the sector regulator. The extensive literature on public choice provides both theoretical and empirical support to the regulatory capture thesis of sector regulators.61

Regulatory capture by sector may be more severe than those of antitrust enforcers for two reasons. The first is that sector regulators have more concentrated interest groups, which makes capture more likely. The multiple missions (including noneconomic ones) of sector regulators also creates additional political pressure points for the executive or legislative branches of government to use to leverage noncompetition concerns. This may impact the outcome of particular merger cases.

The second factor that compounds the capture is the pursuit of “public interest” or merely the veneer of public interest. Whereas some notion of (p.104) efficiency may be (at least in practice) the only factor that determines outcomes in many antitrust systems, sector agencies may need to balance efficiency concerns with the preservation of competitors who may provide consumer choice and diversity.62 Sometimes these concerns may be valid, but sometimes they may result from rent seeking. The point is not to distinguish between the two but merely to note that sector regulation has divergent interests from antitrust that are not based on some sort of efficiency analysis.

Case Study VI—The United States and Sector Regulation in Financial Regulation

Dodd-Frank has been the most important change to the U.S. financial system in a generation. Certain provisions within Dodd-Frank impact issues of competition within financial services and the role of antitrust. Some provisions within Dodd-Frank explicitly address antitrust. There are provisions in the sections that deal with the seizure of failing firms (using a covered financial company and a bridge financial company) that preserve some form of antitrust merger review during the seizure and sale of assets.

In merger analysis, sector merger requirements—along with all other regulatory requirements—are taken as facts that get plugged into the competition analysis by the Federal Reserve. Given the antitrust savings clause, there seems to be a sector-based exemption from antitrust built in along the Trinko63 and Credit Suisse64 model that allow for sector regulation in lieu of antitrust enforcement. Yet, the Federal Reserve has no previous background in merger control for competition issues to understand the antitrust analysis. There is also the risk of industry capture from special interests,65 which may have been by design of the interested parties.

In a change from prior law, Dodd-Frank requires the reviewing agency for a merger in the financial system to analyze a merger for how increased concentration might impact systemwide financial stability66 and “the cost and availability of credit and other financial services to households and businesses in the United States.”67 To prevent concentration, Dodd-Frank imposes market share caps for financial institutions to forbid a merger in which a financial company could hold more than 10 percent of the total liabilities of all financial companies68 or control more than 10 percent of the total amount of U.S. insured deposits.69 For example, a nonbank acquisition of $25 billion may lead to a different analysis from DOJ on competition grounds (where there may be no competitive concern) but that would be a concern of the Federal Reserve for issues of systemic risk. Likewise, a deal that may raise antitrust concerns may not impact system risk. Yet, because banking regulators have a different set of (p.105) economic (and other) assumptions in their review, this may lead to different outcomes than a technocratic antitrust economics analysis.

Case Study VII—Endesa and Spanish Merger Politics

At the level of the creation of national champions (as opposed to European champions), the Commission has been clear. Philip Lowe noted, “National champions are illegal, they’re immoral, and they’re fat.”70 This is not the case at the national level in Europe. The role of government in merger control as a way to chill merger behavior on the part of foreign firms may have been pushed to the level of member states in Europe. Perhaps the best known of these cases involved the aborted takeover of Endesa, a Spanish company, by E.On, a German company. After receiving competition clearance from the European Commission,71 the Spanish government used the sector regulator to impose a series of conditions on E. On that crippled its ability to prevail in its bid. Endesa was sold to a consortium that included a Spanish bidder in which E.On was able to acquire some of the non-Spanish assets.72

DG Competition brought a case based upon the events that unfolded. The Commission correctly found that the Spanish sectoral measures aimed at blocking the E.On bid violated EC law, and the ECJ found in favor of the Commission.73 Of course, the damage had already been done, as E.On had to withdraw its bid. The inability of the Spanish Competition authority to challenge the government effectively in advocacy to stop the creation of a national champion has mixed implications. On the one hand, the fact that the CDC found that the merger did not create competition concerns suggests that it was not subject to political capture in spite of significant government pressure. On the other hand, the government was able to use sector regulation to effectively block the merger between E.On and Endesa.

Case Study VIII—British Banking Nationalizations and Bailouts

The most recent financial crisis provides an example of how national-level competition authorities may be less able to stop naked industrial policy mergers that may be anticompetitive because of the influence of sector regulators. In the United Kingdom, if the government wants to nationalize or partially nationalize a company, it does not have to file a merger control notification with the competition authorities. This is distinct from a state-owned enterprise engaged in economic activity, acquiring another business, under which the normal merger rules would apply. During the financial crisis, the British government nationalized Northern Rock and bought 80 percent of Royal Bank of Scotland. This required a fast-tracked act of Parliament but did not (p.106) involve any antitrust considerations. Moreover, Lloyds Bank was strongly encouraged to acquire Halifax Bank of Scotland (the most exposed UK bank following Lehman Bros). The Office of Fair Trading recommended against the merger on competition grounds, but the Secretary of State for Business created a new public interest ground for circumventing competition concerns. The newly formed bank had to be bailed out anyway, and the UK market has been left with the anticompetitive effects of the merger.74 In this situation, financial stability concerns trumped competition concerns.

Case Study IX—Export Cartels in Canada

Earlier empirical work on the Canadian merger competition system shows that it has moved toward a technocratic model of enforcement based on factors such as market concentration (based upon HHI) and entry barriers and foreign entry.75 Yet, a recent case study illustrates that there are still methods outside of competition law that can impact Canadian mergers in the context of foreign acquisitions in which the state can impose industrial policy concerns on merger control. The proposed BHP Billiton / PotashCorp of Saskatchewan merger is an example in which foreign ownership law (Investment Canada Act) trumped antitrust concerns.

To set the stage, Investment Canada Act’s purpose is to create a mechanism in Canada to align the nature of international investment into the country with Canadian national policy concerns. The Act uses a “net benefit to Canada” test. Issues that emerge in this context include traditional industrial policy concerns such as employment levels of the acquired Canadian firm in Canada and the amount of R&D undertaken postmerger in Canada.

Within the context of Investment Canada Act, BHP Billiton made an unsolicited bid for PotashCorp of Saskatchewan in 2010. The antitrust issue regarding the merger was more interesting than the usual merger analysis. What emerged from BHP is that, postmerger, it would not agree to remain in the international potash export cartel of which PotashCorp was a member. Frederic Jenny details the nature of the international potash market and cartel in his excellent work Export Cartels in Primary Products:The Potash Case.76 In it, he notes the detrimental impact of the potash cartel on developing world markets and the limited ability based on current antitrust tools of developing world consumers to protect themselves against such export cartels.

From the standpoint of the role of antitrust versus other regulation, the Canadian Competition Bureau announced that it would not challenge the deal on competition grounds. After all, the deal did not create competition concerns (p.107) in Canada given that BHP lacked any potash operations worldwide. However, given the Investment Canada Act review, the Canadian government had a second path to block the merger. It was on Investment Canada Act grounds that it did so. Although membership in the potash export cartel was not explicitly part of the discourse, the Canadian government discussed how the proposed acquisition would result in job losses in Canada.

The complete divorce of industrial policy in the case of potash for the Competition Bureau is an important lesson from this episode. That is, given significant political pressure from the Canadian government, the Competition Bureau kept its analysis limited to competition concerns and moved the nonpolitical merger denial outside the realm of competition law.

* * *

Alternative visions of competition and implementation of political factors explain either explicit or implicit politics and state intervention into merger control. A shift seems to be in place in many jurisdictions but such that these considerations may have been removed from the competition analysis and placed in separate statutory regulatory schemes.

This chapter proposes a merger control system that is competition neutral. In an ideal setting, this means the adoption of a standard of antitrust based exclusively on competition economics (whether total or consumer welfare—the various implicit political trade-offs between these two is a second-order problem relative to the issue of overt political factors in antitrust).77 Merger control should become completely technocratic in a way that antitrust concerns are the only ones that are taken into account. Any concerns regarding industrial policy, national security, and so on should become a separate screen taken outside of the competition law context. This will allow competition law to remain more technocratic and nonpolitical and to move noncompetition economic considerations to those areas more prone to public choice concerns, such as sector regulation, the legislative process, or executive fiat, that are better equipped than antitrust to deal with political trade-offs. Over time, as the sophistication of an antitrust agency’s economic analysis improves, this will lead to more efficient outcomes. Privileging the overt sort of state intervention within merger control through the explicit inclusion of noneconomic concerns in the merger area has the potential to bleed into nonmerger antitrust analysis, which would set back antitrust law and policy in many jurisdictions.

Notes:

(1) . Industrial policy has a number of different meanings. See Lawrence J. White, Antitrust Policy and Industrial Policy: A View from the U.S. (Jan. 14, 2008), NYU Law and Economics Research Paper No. 08-05, for both narrow and broad definitions.

(2) . There is a rich literature on public choice and antitrust. See Fred S. McChesney et al., Competition Policy in Public Choice Perspective, in Handbook of International Antitrust Economics (Roger D. Blair & D. Daniel Sokol eds., forthcoming) for an overview.

(3) . ICN, Advocacy and Competition Policy Report (ICN Conference, Italy, 2002), available at http://www.internationalcompetitionnetwork.org/uploads/library/doc358.pdf, 32.

(4) . Stephen Calkins, The Merger Guidelines and the Herfindahl Index, 71 Cal. L. Rev. 402 (1983).

(5) . 4 Phillip Areeda & Donald F. Turner, Antitrust Law 21 (1980).

(6) . Louis Kaplow & Steven Shavell, Fairness Versus Welfare, 114 Harv. L. Rev. 961, 971 (2001).

(7) . Jonathan B. Baker & David Reitman, Research Topics in Unilateral Effects Analysis, in Research Handbook on the Economics of Antitrust Law (Einer Elhauge ed., 2011).

(8) . William Kovacic et al., Coordinated Effects in Merger Review: Quantifying the Payoffs from Collusion, in International Antitrust Law & Policy: Fordham Corporate Law 2006 (Barry Hawk ed., 2006).

(9) . Roy J. Epstein & Daniel L. Rubinfeld, Merger Simulation: A Simplified Approach with New Applications, 69 Antitrust L.J. 883 (2001); Gregory J. Werden & Luke M. Froeb, Simulation as an Alternative to Structural Merger Policy in Differentiated Product Industries, in The Economics of the Antitrust Process (Malcolm B. Coate & Andrew N. Kleit eds., 1996).

(10) . William J. Kolasky & Andrew R. Dick, The Merger Guidelines and the Integration of Efficiencies into Antitrust Review of Horizontal Mergers, 71 Antitrust L.J. 207 (2003); Johan N. M. Lagerlöf & Paul Heidhues, On Desirability of an Efficiency Defense in Merger Control, 23 Int’l J. Indus. Org. 803 (2005).

(p.254) (11) . Joseph Farrell & Carl Shapiro, Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition, 10 BE J. Theoretical Econ. Policies & Perspectives 10 art. 9 (2010), available at http://faculty.haas.berkeley.edu/shapiro/alternative.pdf.

(12) . For example, in the United States, cases such as Brown Shoe Co. v. United States, 370 U.S. 294 (1962) and United States v. Philadelphia National Bank, 374 U.S. 321 (1963) remain good case law, and the agencies still cite such cases when they want to block a merger because the case law is favorable to such an outcome even though the economic understanding of those cases is retrograde by today’s standards.

(13) . William Shughart II, The Government’s War on Mergers:The Fatal Conceit of Antitrust Policy, Cato Policy Analysis No. 323 (Oct. 22, 1998); William F. Shughart II, Monopoly and the Problem of the Economists, in Economic Inputs, Legal Outputs:The Role of Economists in Modern Antitrust 149–62 (Fred S. McChesney ed., 1998).

(14) . Howard A. Shelanski, Justice Breyer, Professor Kahn, and Antitrust Enforcement in Regulated Industries, 100 Cal. L. Rev. 487 (2012).

(15) . See, e.g., South African Competition Act 89 of 1998, as amended by Competition Second Amendment Act 39 of 2000, Chapter 1, § 2; Canadian Competition Act § 1.1 (R.S.C., 1985, c. C-34); Walmart Stores Inc. / Massmart Holdings Ltd. (73/LM/Nov10) (providing an application in the merger setting).

(16) . Roger D. Blair & D. Daniel Sokol, The Rule of Reason and the Goals of Antitrust: An Economic Approach, 78 Antitrust L.J. 471 (2012); Ken Heyer, Welfare Standards and Merger Analysis Revisited, 8 Competition Pol’y Int’l 143 (2012).

(17) . The antitrust problem addressed by Oliver Williamson provides a good illustration of the required balancing. See Oliver E. Williamson, Economies as an Antitrust Defense:The Welfare Trade-Offs, 58 Am. Econ. Rev. 18 (1968).

(18) . See generally Svetlana Avdasheva et al., Collective Dominance and Its Abuse Under the Competition Law of the Russian Federation, 35 World Competition 249, 269 (2012); Malcolm B. Coate & Shawn W. Ulrick, Transparency at the Federal Trade Commission:The Horizontal Merger Review Process: 1996–2003, 73 Antitrust L.J. 531, 543 (2006); Timothy J. Muris & Bilal K. Sayyed, The Long Shadow of Standard Oil: Policy Petroleum, and Politics at the Federal Trade Commission, 85 S. Cal. L. Rev. 843, 848 (2012).

(19) . See Mats Bergman et al., Comparing Merger Policies in European Union and the United States, 36 Rev. Ind. Org. 305 (2010); Ulrich Schwalbe & Daniel Zimmer, Law and Economics in European Merger Control (OUP 2009); Tomaso Duso et al., An Empirical Assessment of the 2004 EU Merger Policy Reform (2010) (WZP discussion paper), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1721412.

(20) . See, e.g., Robert Pitofsky, The Political Content of Antitrust, 127 U. Pa. L. Rev. 1051 (1979).

(21) . Hillary Greene, Guideline Institutionalization:The Role of Merger Guidelines in Antitrust Discourse, 48 Wm. & Mary L. Rev. 771 (2006).

(22) . Leah Brannon & Douglas H. Ginsburg, Antitrust Decisions of the Supreme Court: 1967 to 2007, 3 Competition Pol’y Int’l 1, 22 (2007).

(23) . Luke M. Froeb et al., The Economics of Organizing Economists, 76 Antitrust L.J. 569, 573 (2009).

(24) . Daniel Crane, Technocracy and Antitrust, 86 Texas L. Rev. 1159, 1211–20 (2008).

(25) . Malcolm B. Coate, Bush, Clinton, Bush: Twenty Years of Merger Enforcement at the Federal Trade Commission 24 (Sept. 2009) (working paper).

(26) . Malcolm B. Coate, A Test of Political Control of the Bureaucracy:The Case of Mergers, 14 Econ. & Pol. 1 (2002).

(27) . See McChesney et al., supra note 2.

(28) . Robert Pitofsky, How the Chicago School Overshot the Mark: The Effect of Conservative Economic Analysis on U.S. Antitrust 233 (2008).

(29) . Ilene Knable Gotts & James F. Rill, Reflections on Bush Administration M&A Antitrust Enforcement and Beyond, 5 Competition Pol’y Int’l 91 (2009).

(30) . Jonathan B. Baker & Carl Shapiro, Reinvigorating Horizontal Merger Enforcement, in How the Chicago School Overshot the Mark: the Effect of Conservative Economic Analysis on U.S. Antitrust 109, 109–10 (Robert Pitofsky ed., 2008).

(31) . Malcolm B. Coate, Bush, Clinton, Bush: Twenty Years of Merger Enforcement at the Federal Trade Commission 24 (Sept. 2009) (unpublished manuscript), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1314924. (“Little evidence can be found to suggest that the enforcement (p.255) regime changed [across Bush, Clinton, and Bush administrations] in response to either political control or the specific wording of the Merger Guidelines.”); Daniel A. Crane, Has the Obama Justice Department Reinvigorated Antitrust Enforcement?, 65 Stan. L. Rev. Online 13 (2012).

(32) . D. Daniel Sokol, Antitrust, Institutions, and Merger Control, 17 Geo. Mason L. Rev. 1055 (2010).

(33) . Luke M. Froeb et al., The Economics of Organizing Economists, 76 Antitrust L.J. 569 (2009).

(34) . United States v. Von’s Grocery Co., 384 U.S. 270 (1966).

(35) . D. Daniel Sokol, Antitrust, Institutions, and Merger Control, 17 Geo. Mason L. Rev. 1055 (2010).

(36) . Ulrich Schwalbe & Daniel Zimmer, Law and Economics in European Merger Control (OUP 2009); Tomaso Duso et al., An Empirical Assessment of the 2004 EU Merger Policy Reform (2010) (WZP discussion paper), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1721412.

(37) . Damien Geradin & Ianis Girgenson, Industrial Policy and European Merger Control—A Reassessment (working paper 2011).

(38) . See Mats Bergman et al., Comparing Merger Policies in European Union and the United States, 36 Rev. Ind. Org. 305 (2010).

(39) . Aerospatiale-Alenia / de Havilland (91/619/EEC), 1991 O.J. (L 334) 42.

(40) . Francesco Russo et al., European Commission Decisions on Competition: Economic Perspectives on Landmark Antitrust and Merger Cases (2010).

(41) . Mats A. Bergman et al., Atlantic Divide or Gulf Stream Convergence: Merger Policies in the European Union and the United States (Apr. 13, 2010). Available at http://ssrn.com/abstract=975102.

(42) . James C. Cooper et al., Vertical Antitrust Policy as a Problem of Inference, 23 Int’l J. Indus. Org. 639 (2005).

(43) . Eleanor M. Fox, Mergers in Global Markets: GE/Honeywell and the Future of Merger Control, 23 U. Pa. J. Int’l Econ. L. 457 (2002).

(44) . Nihat Aktas et al., European M&A Regulation Is Protectionist, 117 Econ. J. 1096 (2007); Tomaso Duso et al., The Political Economy of European Merger Control: Evidence Using Stock Market Data, 50 J.L. & Econ. 455 (2007); Serdar Dinc & Isil Erel, Economic Nationalism in Mergers & Acquisitions (2011) (working paper). On the use of financial stock market return event studies for competition policy, see Tomaso Duso et al., Is the Event Study Methodology Useful for Merger Analysis? A Comparison of Stock Market and Accounting Data, 30 Int’l Rev. L. & Econ. 186 (2010).

(45) . Nihat Aktas et al., Market Reactions to European Merger Regulation:A Reexamination of the Protectionism Hypothesis, (2011) (working paper).

(46) . Commission Decision Case IV/M.877, Boeing / McDonnell Douglas, 1997 O.J. (L 335).

(47) . Commission Decision Case COMP/M.2220, General Electric / Honeywell, 2001, 2004 O.J. (L 48) 1, prohibition aff’d, Case T-210/10, Court of First Instance, Dec. 14, 2005 (EU).

(48) . Commission Decision Case COMP/M.3216, Oracle/PeopleSoft, 2004, 2005 O.J. (L 218).

(49) . See generally Eleanor M. Fox, GE Honeywell: The U.S. Merger that Europe Stopped—A Story of the Politics of Convergence, in Antitrust Stories (Daniel A. Crane & Eleanor M. Fox eds., 2007).

(50) . Daniel J. Gifford & Robert T. Kudrle, European Union Competition Law and Policy: How Much Latitude for Convergence with the United States?, 48 Antitrust Bull. 727 (2003).

(51) . The EU even incorporated evidence from the U.S. trial. Press Release, European Comm’n, Commission Clears Oracle’s Takeover Bid for PeopleSoft (Oct. 26, 2004), available at http://europa.eu.int.

(52) . Christian Duvernoy & Sven Völcker, Oracle in Brussels, M&A Lawyer (Sept. 2005). (“One theory is that after GE/Honeywell, the Commission was making a political decision and hiding that fact: ‘Let’s look different and independent, but let’s also come out with the same result.’”)

(53) . Patrick Massey, Taking Politics Out of Mergers: A Review of Irish Experience, 6 J. Competition L. & Econ. 853 (2010).

(54) . Ping Lin & Jingjing Zhao, Merger Control Policy under China’s Anti-Monopoly Law, 41 Rev. Ind. Org. 109 (2012); Pingpin Shan et al., China’s Anti-Monopoly Law:What Is the Welfare Standard?, 41 Rev. Ind. Org. 31 (2012).

(55) . D. Daniel Sokol, Merger Control under China’s Anti-Monopoly Law (2013) (working paper).

(56) . Air New Zealand v. Commerce Commission (No. 6) (2004) 11 TCLR 347 (HC), at 42.

(57) . In New Zealand competition law cases, the High Court judge sits with a lay expert as part of his court, usually an economist.

(58) . Godfrey Hirst NZ Limited, Judgment of Court CIV 2011-485-1257 at ¶ 5.

(59) . Id. at ¶ 327.

(p.256) (60) . Int’l Competition Network, Antitrust Enforcement in Regulated Sectors Working Group, Subgroup 1: Limits and Constraints Facing Antitrust Authorities Intervening in Regulated Sectors (2004).

(61) . See generally Dennis Mueller, Public Choice III (2003).

(62) . Howard A. Shelanski, Antitrust Law as Mass Media Regulation: Can Merger Standards Protect the Public Interest?, 94 Cal. L. Rev. 371, 394 (2006).

(63) . Verizon Comm., Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004).

(64) . Credit Suisse Securities LLC v. Billing, 551 U.S. 264, 284 (2007).

(65) . George J. Stigler, The Theory of Economic Regulation, 2 Bell J. Econ. & Mgmt. Sci. 3 (1971).

(66) . Dodd-Frank, §§ 604, 622(e).

(67) . Id. § 622(e)(1)(A).

(68) . Id. § 622(b)-(c).

(69) . Id. § 623(c).

(70) . Philip Lowe, Speech to the Enforcing Competition Law Conference, London: What Is Wrong with National Champions? (June 23, 2006).

(71) . Under the two-thirds rule, a merger has an EU-wide dimension for merger control if two-thirds of the turnover of each of the merging parties is in the same member state.

(72) . Damien Gerard, Protectionist Threats against Cross-Border Mergers: Unexplored Avenues to Strengthen the Effectiveness of Article 21 ECMR, 45 Common Mkt. L. Rev. (2008).

(73) . Case C-196/07 Commission v. Spain, judgment of Mar. 6, 2008.

(74) . Andreas Stephan, Did Lloyds/HBOS Mark the Failure of an Enduring Economics Based System of Merger Regulation?, 62 N. Ireland Legal Q. 539 (2011).

(75) . R. S. Khemani & D. M. Shapiro, An Empirical Analysis of Canadian Merger Policy, 41 J. Indus. Econ. 161 (1993).

(76) . Frederic Jenny, Export Cartels in Primary Products:The Potash Case in Perspective, in Trade, Competition and the Pricing Commodities (Frederic Jenny & Simon Evenett eds., 2012).

(77) . Although elsewhere I have argued for a total welfare standard, here my broader point is that the sole standard for antitrust should be the political choice between an antitrust-specific welfare standard, not between antitrust economics and other non-antitrust economics considerations.