Eliciting Information from Interested parties in merger control

Abstract

This article investigates how antitrust agencies should structure the disclosing of information about e¢ ciency gains from interested parties (merging Örms, and competitors) in merger control. We analyze the particular case of a horizontal merger with danger of foreclosure, where welfare can decrease either due to insu¢ cient e¢ ciency gains (e¢ ciency defense) or due to excessive e¢ ciency gains if the competitor exits (e¢ ciency o§ense). The Örst result is that evidence from competitors is not required unless the ex-ante market shares of the merging Örms exceed a threshold. Second, we support the role of advocacy of the parties. The burden of proof for the e¢ ciency defense should rest on the insiders (merging Örms) whereas the burden of proof for the e¢ ciency o§ense should rest on outsiders (competitors). Finally, it is optimal to make insiders report Örst and outsiders second and any communication among parties has to be prohibited.