By Robert W. Doyle, Jr. Powell, Goldstein, Frazer & Murphy LLP rdoyle@pgfm.com

Mergers & Acquisitions Primer

Horizontal Merger Guidelines

Review of a proposed merger is typically conducted under the framework set forth in the Horizontal Merger Guidelines jointly issued by the DOJ and the FTC in 1992. U.S. Dep't of Justice & Federal Trade Comm'n, Horizontal Merger Guidelines , reprinted in 4 Trade Reg. Rep. (CCH) ¶ 13,104 (the " Guidelines "). The Guidelines were most recently revised in April 1997 to clarify the analysis and consideration of efficiencies that may result from a proposed merger.

The analytical framework of the Guidelines involves the following:

1. defining the relevant product market and geographic market and identifying the firms that compete in these relevant markets;
2. measuring concentration in the relevant markets using the Herfindahl-Hirschmann Index ("HHI");
3. assessing the ease of entry by new firms into the markets;
4. assessing the likely competitive effects of the merger in light of the market concentration and other factors that characterize the markets; and
5. considering any significant efficiencies resulting from the merger that could not be achieved by other means.

       

Copyright 1999 Robert W. Doyle, Jr.