Upward Pressure on Price Analysis: Issues and Implications for Merger Policy

"For over 15 years, analysts have searched for a better method to evaluate the potential competitive effects from anticompetitive mergers involving differentiated products. The traditional analysis involves the definition of a relevant market and the use of concentration statistics adapted to the evaluation of unilateral effects. Some economists, however, have suggested dropping the concept of the market from the antitrust lexicon and directly estimating the unilateral competitive effect. Instead of applying a structural market analysis, merger simulation would predict the price increase likely to stem from the merger under review. Within this approach, other types of evidence might rebut the simulation results, but, absent sufficient immunising evidence, the simulation results would prove the violation."