Economic analysis in merger investigations

Abstract

Economics plays a central role in effective merger enforcement, as it provides the conceptual framework to assess merger effects. Additionally, effective merger enforcement relies on the merger assessment being firmly rooted in evidence. Economic analysis is often key in interpreting this evidence. This article discusses the role of economists and economic analysis in merger investigations by the Competition and Markets Authority, in particular in relation to the approach to economic analysis and evidence gathering, and the wider contribution of economists at the CMA in developing the toolkit used for assessing mergers.

OECD Competition Trends 2021

“…This move has been recognised by the OECD, which in December 2020 devoted a Global Forum on Competition session to the use of economic analysis in merger investigations. 21 At the same time, a number of core concepts of merger control analysis have come under increased scrutiny as a result of market developments. For example, debates about the usefulness of market definition have resurfaced.…”

“…As with vertical mergers, the OECD held a roundtable on "Conglomerate Effects of Mergers" in June 2020, which reviewed the scenarios in which conglomerate theories of harm may be deployed (OECD, 2020 [21]).…”

“…There have also been calls to use merger control for conglomerate practices for broader public-interest reasons, which are not necessarily connected to a merger's anticompetitive effects. The extent to which merger control can or should be relied upon to address such concerns is yet to be determined (OECD, 2020 [21]).…”