Forward-looking and backward-looking application of Section 7
In response to my previous post, a reader brought this article by Scott Sher to my attention. Sher is critical of ex post post-closing merger review, and cautions as follows:
In the rare instances where post-consummation review is appropriate to make its case under Section 7, the government must demonstrate that the merger itself is the competitive problem, not the changing nature of the market dynamic. Thus, the government must demonstrate through evidence of the market structure — not simply evidence of post-close behavior — that a transaction represents a true competitive concern.The problem harkens back to U.S. v. DuPont, where the government challenged a partial acquisition of GM by DuPont after 23 years (!), and the Supreme Court found that the point in time for analyzing the elements of a Section 7 claim is the time of the lawsuit, not the time of the acquisition. That, in my view, is the correct result. In ex post cases, the Section 1 and Section 7 standards, in substance, have converged. However, proving causation for diminished post-acquisition market performance may not always be an easy task for the plaintiff, for the reasons that Sher cites above. That said, from an epistemological point of view, proving past effects is less of a problem than extrapolating potential future effects.
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