Economics plays a role in merger review, but its role—or its proper role, anyway—is surprisingly elusive. Merger review by the Department of Justice Antitrust Division and Federal Trade Commission (the Agencies) is a form of legal enforcement, and legal enforcement combines two tasks that are in tension: conscientious interpretation of the law created by Congress and courts, and discretionary allocation of enforcement resources. The law is just what it is—the Agencies cannot change it, though they can try to influence its development, for example, by making arguments to courts and lobbying Congress. Enforcement takes place within the confines of the law and is supposed to advance it. But within these constraints, the Agencies can rely on policy considerations. The Biden administration, for example, has encouraged the Agencies to give priority to anticompetitive behavior in labor, agriculture, the IT sector, healthcare, and telecommunications. The Reagan DOJ departed from previous enforcement patterns that it believed did not advance efficiency.

In the area of merger review, the Agencies have announced enforcement priorities in a series of Merger Guidelines. From the beginning, and with increasing emphasis from the 1980s, those guidelines have borne the imprint of the economic wisdom of the day. The replacement of concentration ratios with the HHI formula, the growing emphasis on price predictions, the efficiency rebuttal, intermittent skepticism of concentration levels as a basis for liability—all of these concepts and notions were invented, elaborated, or endorsed by academic economists, economically oriented lawyers, and government economists.

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