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From its modern origins more than thirty years ago federal merger policy has centered around the use of standard surrogates for market power to make presumptions about the likely effects of mergers. Since that time it has been evolving towards an increasingly complex approach as economic considerations have expanded their influence on merger policy. This trend was solidified in the 1982 revision of the Department of Justice's Merger Guidelines, accelerated by the Department of Justice and Federal Trade Commission 1992 Horizontal Merger Guidelines' increased emphasis on unilateral (as opposed to collusive) anticompetitive effects, and has reached new heights in the last few years with new unilateral theories and the application of econometric analysis of market data and game-theory based simulation programs. In effect, merger policy has been moving away from reliance on surrogates and towards an approach that instead tells an economics-based story of anticompetitive harm — an approach that directly asks and answers the ultimate question: are prices to consumers likely to increase as a result of a merger? This new approach can lead to surprising conclusions. Many of these issues will be illustrated through the analysis of a merger enforcement action that was the largest, most economically complex, and among the most controversial ever brought by the Federal Trade Commission — its challenge to the Staples/Office Depot transaction.





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