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The structural presumption in horizontal merger review: evidence from Monte Carlo experiments

US antitrust agencies lowered the threshold of concentration required for the presumption of anticompetitive effects (“the structural presumption”) in 2023. We provide evidence using Monte Carlo experiments that the new presumption flags many more mergers and reflects an agency preference to decrease the Type II error rate at the expense of generating many more Type I errors. We also show that the agencies could improve the accuracy of the presumption without increasing leniency by relying only on changes in concentration. This is true across common settings of competition and demand structures, though the optimal level of the presumption varies. Then, we show that the structural presumption is an effective way to screen for mergers under uncertainty in parameters, but current concentration measures are inadequate to screen for coordinated effects.

(2024-05-28) Bernardini, Davide; Wohlleben, Matt