“Efficiency” is not enough

May 18, 2014

For the past 30 years or so, it has been a somewhat open secret that the road to an FTC-approved merger is paved with promises of efficiencies. Indeed, it has often seemed that no objection could withstand the power of an efficiencies argument – no matter how optimistic or speculative – as long as the argument was at least plausible. But times are changing. Bold forecasts about efficiencies flowing from mergers are no longer being accepted by the commission at face value. Instead, it is increasingly the case that they must be substantiated by hard data and not just the promises of hard-charging corporate executives.