Introduction What are merger guidelines supposed to do? Should they identify the mergers most likely to attract enforcement scrutiny? Should they explain the economic principles that guide merger review? Or should they simply describe the range of considerations a competition authority may take into account when exercising its discretion? In this episode of the Rethinking Antitrust Podcast, Bilal Sayyed speaks with Gregory J. Werden, one of the most influential figures in the development of modern merger analysis. During a forty-year career at the U.S. Department of Justice Antitrust Division, Greg played a central role in the evolution of merger-guidelines policy and remains one of the most important voices in contemporary antitrust economics. The discussion focuses on the European Commission's proposed Merger Guidelines, which would replace the Commission's 2004 Horizontal Merger Guidelines and 2008 Non-Horizontal Merger Guidelines. The draft introduces new concepts, including resilience, sustainability, investment competition, innovation competition, ecosystems, and a formal framework organized around theories of harm and theories of benefit. Greg welcomes some aspects of the proposal, particularly its effort to think more systematically about benefits and efficiencies. At the same time, he raises a more fundamental concern: whether the draft actually performs the core function that merger guidelines are supposed to serve. Central Theme A recurring question throughout the discussion is whether the proposed Guidelines are truly guidelines or instead a description of Commission discretion. Greg argues that merger guidelines should promote rule-of-law values by helping firms understand which mergers are likely to be challenged, which are not, and why. In his view, the draft Guidelines devote substantial attention to theories, concepts, and considerations while providing surprisingly little guidance about how those concepts will actually be applied. The result, he suggests, is a document that may explain how the Commission thinks about mergers without materially improving predictability for firms contemplating them. Rather than narrowing uncertainty, the draft often preserves flexibility and discretion while leaving important analytical questions unanswered. Links: Transcript of the episode (https://tinyurl.com/3udc3zuv)
Episode Summary
Bilal and Greg begin by discussing the role merger guidelines play in competition law and enforcement. Greg argues that good guidelines serve two important functions. First, they constrain agency discretion and provide meaningful notice to businesses about likely enforcement outcomes. Second, they educate courts, practitioners, and agency staff about how merger analysis should be conducted. In his view, the most successful merger guidelines have advanced both objectives.
The discussion then turns to the historical significance of the European Commission's 2004 Horizontal Merger Guidelines and 2008 Non-Horizontal Merger Guidelines. Greg explains how those documents reflected the increasing influence of economics within DG Competition and helped bring European merger analysis closer to modern economic approaches. Although he does not believe the Commission has fundamentally abandoned that framework, he argues that the economic foundations of the current draft are often obscured rather than illuminated.
A recurring theme throughout the interview is the relationship between law and economics in merger analysis. Greg repeatedly observes that the draft reads more like a lawyer's document than an economist's document. While he believes the Commission continues to rely on economics in practice, he argues that many portions of the draft identify conclusions without adequately explaining the economic mechanisms that connect a merger to those outcomes. In his view, economic analysis is often present but concealed.
The conversation explores the draft's treatment of consumer welfare, competitiveness, resilience, sustainability, and related policy objectives. Greg argues that the draft broadens the range of considerations that may be incorporated into merger review by linking them to consumer welfare. While he acknowledges that these concepts may have consumer-welfare dimensions, he questions whether merger control is the proper vehicle for pursuing them and worries that competition itself becomes less central as additional policy objectives are incorporated into the analysis.
Bilal and Greg then examine what Greg considers one of the draft's most promising ideas: the distinction between theories of harm and theories of benefit. Properly understood, Greg argues, these concepts should represent competing narratives about how a merger affects competition. A theory of harm is the agency's explanation of why a transaction harms competition. A theory of benefit is the parties' explanation of why the transaction benefits consumers or competition. Framed this way, merger analysis becomes a contest between competing narratives supported by facts, evidence, and economic reasoning.
Yet Greg's principal criticism emerges again. Throughout the interview he emphasizes that merger theories require mechanisms, not merely outcomes. A statement that a merger reduces innovation, weakens competition, entrenches dominance, or eliminates an important competitive force is not, by itself, a theory of harm. A theory of harm requires an explanation of how and why the merger produces those effects. Greg argues that many portions of the draft identify possible outcomes without sufficiently developing the mechanisms needed to make those theories operational.
This criticism appears repeatedly in the discussion of unilateral effects, innovation competition, important competitive force theories, ecosystems, and foreclosure. Greg argues that many of the draft's concepts are potentially useful but insufficiently developed. Theories are often introduced without explaining how they work, how they should be applied, or how decision-makers should distinguish between transactions that raise concerns and those that do not.
The interview also explores the draft's treatment of evidence. Greg is skeptical that extensive discussions of evidentiary categories provide meaningful guidance. In his view, merger analysis ultimately requires assembling a persuasive factual narrative supported by both qualitative and quantitative evidence. He argues that economists routinely rely on a broad collection of facts, data points, and observations to understand competitive dynamics and that rigid distinctions among categories of evidence often add little analytical value.
Innovation competition receives particular attention. Greg agrees that innovation is critically important and that competition authorities should take innovation seriously. At the same time, he argues that innovation competition differs fundamentally from traditional price competition because innovation often expands markets rather than simply reallocating existing sales among competitors. He questions whether the analytical tools used to evaluate static competition can easily be adapted to evaluate dynamic competition and expresses skepticism that current economic learning provides sufficiently reliable guidance for predicting how mergers affect innovation.
The conversation also addresses efficiencies and theories of benefit. Although the draft appears to place greater emphasis on efficiencies than earlier Commission guidelines, Greg remains skeptical that the practical treatment of efficiencies will change significantly. He argues that the draft imposes demanding requirements regarding timing, quantification, verification, and documentation that may be particularly difficult to satisfy for innovation-related benefits, dynamic efficiencies, and products that do not yet exist. In his view, the Commission has formally embraced efficiencies while simultaneously creating a framework that may make them difficult to establish in practice.
Bilal and Greg then discuss foreclosure, ecosystems, entrenchment theories, innovation acquisitions, and the proposed innovation shield. Greg questions several aspects of the Commission's foreclosure analysis and argues that vertical mergers often generate efficiencies that receive insufficient attention. He is similarly skeptical of ecosystem theories that focus primarily on potential harms while giving little weight to the efficiencies associated with integrated platforms, complementary products, and ecosystem development. He also expresses concern that the innovation shield may discourage acquisitions by the firms best positioned to commercialize new technologies.
The discussion concludes with a broader debate about how merger guidelines should be organized. Greg argues that theories of harm should be structured around the mechanisms through which mergers affect competition rather than around broad categories that combine multiple distinct theories. In his view, the organizing principles of merger guidelines should help readers understand not only what concerns the agency, but also why those concerns arise and how they are expected to affect competition.
Ultimately, Greg concludes that the draft may be useful as a catalogue of concepts and concerns that the Commission wishes to consider in merger review. What it does not provide, in his view, is the type of guidance traditionally associated with merger guidelines. Rather than narrowing uncertainty, the draft often leaves key questions unanswered, preserving broad discretion for the Commission while providing firms and advisers limited insight into how that discretion will be exercised.
Topics Covered
About the Guest
Gregory J. Werden retired from the U.S. Department of Justice Antitrust Division after a distinguished forty-year career as an antitrust economist. He played a leading role in the development of modern merger-guidelines analysis and is widely recognized as one of the most influential thinkers in antitrust economics. He is the author of The Foundations of Antitrust: Events, Ideas, and Doctrines and remains an active commentator on competition policy, merger enforcement, and antitrust jurisprudence.