2021-09-26-ITIF-Reforming_Merger_Reviews_to_Preserve_Creative_Destruction_50页_520kb

Reforming Merger Reviews to Preserve Creative Destruction Summary

This document critiques the push for aggressive merger reforms based on claims of rising market concentration and lax enforcement. The authors argue that:

1. Market Concentration Has Not Increased Significantly, especially after accounting for proper measurement (e.g., using six-digit NAICS codes), contrary to White House claims. Most industries showed slight or no change in concentration, and slightly concentrated industries actually decreased in number.
2. Mergers Are Often Beneficial, contributing to innovation, productivity, and competition through economies of scale, new technologies, and access to complementary assets. Many high-profile acquisitions (e.g., Disney/Pixar, Google/Android, Aetna/CVS) created value.
3. Merger Enforcement Has Not Decreased, with stable enforcement actions and ratios over the past decade. Agencies review many transactions, including small ones, and legal thresholds (like the Hart-Scott-Rodino Act) remain effective.
4. Current Merger Laws Are Sufficient and Flexible, capturing innovation concerns within existing frameworks (e.g., Section 7 of the Clayton Act and the 2010 Horizontal Merger Guidelines). Regulatory certainty should be preserved, not decreased by legislative changes.
5. "Killer Acquisition" Claims Are Overstated. Most acquisitions analyzed show pro-competitive effects, improving efficiency or enabling innovation. While some dismissals of products might occur, they do not necessarily harm innovation or competition.

Recommended Approach

Instead of radical changes, the authors suggest a dynamic approach to antitrust:

• Perform retrospective merger evaluations to assess past predictions vs. outcomes.
• Update merger guidelines with a focus on reducing entry/exit barriers.
• Use mandatory licensing as a remedy for some mergers rather than blocking them.
• Increase agency resources for better enforcement scrutiny and post-merger analysis.

The core message is that preserving Schumpeterian "creative destruction" and innovation incentives should guide merger policy, not automatically rejecting large mergers or drastically tightening antitrust rules.