U.S.: It looks like Democrats want a public interest clause in merger control

Public interest clauses are somewhat controversial. They introduce non-competition considerations into the evaluation of the desirability of a merger and, therefore, give a queasy feeling to the neoclassical orthodoxy. In short, such clauses allow the competition authority or another regulator to evaluate the effects that the merger will have in aspects of the economy other than market power––for example, employment. In practice, these clauses can introduce uncertainty to the merging parties as to what they can expect in a final decision and can make the proceedings susceptible to political calculations.

Public interest clauses can be found in legislations of many a developed and developing country. Recent prominent examples where such a consideration played a key role are the SAB Miller-AB InBev merger in South Africa and the takeover of Tengelmann by Edeka in Germany (in this latter case, the approval of the merger by the Finance Minister led the chief of the Monopolies Commission to resign).

Now, Democrats in the United States are giving competition law a prominent position in their economic policy plans. According to an article in Bloomberg Law, the antitrust part of the plan says that “large mergers that would harm consumers, workers, and competition via higher prices and lower wages should be blocked.” (emphasis added) For this, Democrats want to establish “new merger standards that require regulators to review how the deal may impact wages and jobs, among other criteria”. This would arguably need an amendment to introduce a public interest clause, at least to be on the safe side (courts would in all likelihood strike down any agencies’ attempt to introduce such considerations based only on the Clayton Act).

The US has always been a champion of convergence of competition law around the world. An important part of this convergence effort is the urge to use an economic approach to enforce the law. What scholars and practitioners mean by economic approach is to focus on consumer welfare or efficiency as the sole concern. Hence the economic part of the term is somewhat confusing because this discipline is so much broader. But putting this discussion aside, it is somewhat ironic to see that convergence may ultimately go the other way around, with the US converging to other countries.

What are the driving forces behind this political movement? As I shared with you last week, some academics are increasingly worried with the effects of concentration on equitable growth, which has led them to start exploring their association. This will be perhaps one of the most crucial areas of research in antitrust analysis. It is of course a highly ideological subject but let’s hope that the availability of data in more and more countries around the world and the empirical research that they allow will ground the debate on more objective terms.

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