DP14979 Concentration Screens for Horizontal Mergers
Concentration-based screens for horizontal mergers, such as those
employed in the US DOJ and FTC Horizontal Merger Guidelines,
play a central role in merger analysis. However, the basis for
these screens, in both form and level, remains unclear. We show that
there is both a theoretical and an empirical basis for focusing solely
on the change in the Herfindahl index, and ignoring its level, in
screening mergers for whether their unilateral effects will harm consumers.
We also argue, again both theoretically and empirically, that the
levels at which the presumptions currently are set may be too lax,
especially with regards to safe harbors.