Abstract
The downstream-collusion effect is one of the possible impacts on competition after a vertical merger. However, little legal and economic literature has discussed this topic thoroughly. Therefore, this Article first delves into analyzing the harm of the downstream-collusive effect. By using game-theoretic models, we find that the scale of the saved unit cost or downstream cost and the level of heterogeneity between the downstream firms’ final goods could affect the incentives of downstream-collusive behavior. Next, we integrate the concepts derived from the models into the Vertical Merger Guidelines and the burdenshifting framework. This economic concept should aid antitrust agencies in assessing the viability of bringing vertical merger challenges with some proof of downstream-collusive behavior. Finally, we address our critiques of the AT&T–Time Warner merger case and take it as an example to demonstrate how to apply the updated burden-shifting framework to a real-world merger case. This should aid federal courts in understanding how to analyze the downstream-collusive effect in future vertical merger cases.
Recommended Citation
Lu, Thomas Y. and Wang, Chun-Chieh
(2022)
"Analysis of the Downstream-Collusive Effect in Vertical Mergers,"
Florida Journal of International Law: Vol. 34:
Iss.
1, Article 2.
Available at:
https://scholarship.law.ufl.edu/fjil/vol34/iss1/2