The Yale Law Journal

May 2018

Horizontal Mergers, Market Structure, and Burdens of Proof

Antitrust Law

abstract. Since the Supreme Court’s landmark 1963 decision in United States v. Philadelphia National Bank, antitrust challengers have mounted prima facie cases against horizontal mergers that rest on the level and increase in market concentration caused by the merger. Proponents of the merger are then permitted to rebut by providing evidence that the merger will not have the feared anticompetitive effects. Although the means of measuring that concentration as well as the triggering levels have changed over the last half century, this basic approach has remained intact. This longstanding structural presumption has been critical to effective merger enforcement. In this Feature, we argue that the structural presumption is strongly supported by economic theory and evidence and suggest some ways to further strengthen it. We also respond to those who would weaken or eliminate it. Our analysis applies to the modern legal landscape, where the promotion of competition and the protection of consumer welfare are considered the purpose of merger enforcement.

We also consider a promising recent legislative proposal that aims to strengthen and expand the structural presumption. In particular, we suggest that the proposal can be improved so as to strengthen merger enforcement, primarily by facilitating the government’s establishment of its prima facie case, while staying true to the fundamental goal of antitrust to promote competition.

authors. Herbert Hovenkamp is the James G. Dinan University Professor, Penn Law and Wharton Business, University of Pennsylvania. Carl Shapiro is the Transamerica Professor of Busi ness Strategy, Haas School of Business, University of California at Berkeley. We thank participants at the “Unlocking the Promise of Antitrust Enforcement” conference at American University, as well as the editors of the Yale Law Journal, for valuable input on an earlier draft. No party other than UC Berkeley provided any financial support to Shapiro for this Feature.