- Oligopoly — Remedies in merger cases — Conglomerate effects — Horizontal mergers — Substantial lessening of competition test (SLC) — Unilateral effects — Vertical effects
This chapter deals with the economics of merger review. Key economic concepts such as market definition, barriers to entry, and countervailing buyer power were discussed in earlier chapters. The current chapter sets out the principles behind the substantial lessening of competition (SLC) test and its variants, and of counterfactual analysis, including the failing-firm defence. The chapter then turns to unilateral effects, in particular the analysis of closeness of competition (including diversion analysis and consumer surveys) and the techniques for simulating price effects from mergers. The chapter also discusses co-ordinated effects (including the theory of tacit collusion), non-horizontal mergers (in particular vertical mergers), and minority shareholdings. Finally, it covers merger efficiencies: how they arise, how they can be measured, and in which situations they benefit consumers sufficiently to offset any anti-competitive effects of the merger.