erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Unilateral Effects, Direct Price Estimates, and Efficiencies in Antitrust Merger Enforcement: FTC vs. Staples (1997)

Frederick R. Warren-Boulton (MICRA Inc., USA)
Serdar Dalkır (MICRA Inc., USA)

Abstract

The first and the second-largest office superstore chains in the United States, Office Depot and Staples, announced their decision to merge in September 1996. In April 1997, the Federal Trade Commission (FTC) found probable violation of Section 7 of the Clayton Act. In June 1997, a U.S. District Court agreed with the FTC. Staples spotlighted the potential for a merger to have "unilateral effects," a shift in focus first signaled by the 1992 Department of Justice and FTC Merger Guidelines. Another new practice first introduced in Staples was FTC's primary reliance on direct estimates of the mergers' effect on prices, rather than inferring price increases from the change in market structure. We first illustrate the difference between the unilateral effects approach from the structural approach. We then describe how the methodology of the 1992 Guidelines was applied in Staples, focusing on the direct price effects and the efficiency claims, which we see as the defining elements of the case.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
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e-mail: metuerc@metu.edu.tr