Merging in the Shadow of the Law: The Case for Consistent Judicial Efficiency Analysis
This Article examines current judicial interpretation of Section 7 of the Clayton Act through the lens of negotiation theory. The research exposes a gap between how courts state they are analyzing efficiency claims in Section 7 Clayton Act enforcement actions and what they are actually doing. During periods of lax antitrust enforcement, this pattern is not readily visible, since almost all proposed merger and acquisition (“M&A”) deals are approved. With a shift to more aggressive antitrust policy, however, it is critical that merger review include appropriate weighing of transaction-generated efficiencies—something missing from courts’ current antitrust analysis. Although only a small number of Section 7 cases are litigated each year, corporate negotiators assess thousands of potential M&A deals annually. For decades, scholars have applied microeconomic models to analyze antitrust policy. This Article applies analytical frameworks from the negotiation literature to demonstrate how, in an environment of increased enforcement, current judicial efficiency analysis would discourage corporate negotiators from pursuing efficient deals, thereby hurting the competitiveness of U.S. companies and markets.