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77 N.Y.U. L. Rev. 135 (2002)
Mavericks, Mergers, and Exclusion: Proving Coordinated Competitive Effects under the Antitrust Laws

handle is hein.journals/nylr77 and id is 149 raw text is: ARTICLE
Antitrust law has long been concerned that the loss of a firm, through merger or
exclusion, may improve the prospects for tacit or express collusion in a concen-
trated market. In merger law, this perspective has been codified as a presumption
of anticompetitive effect arising from high and increasing market concentration.
Antitrust's structural presumption has been eroding in the courts, however, in part
because its economic underpinnings increasingly are seen as unsettled. This Article
explains how coordinated competitive effects analysis can be reconstructed around
the role of a maverick firm that constrains prices when industry coordination is
incomplete. Doing so helps distinguish procompetitive mergers from anticompeti-
tive ones, and may aid in the analysis of alleged exclusion. It also provides a new
economic justification for the structural presumption and points toward a continu-
ing role for that presumption when the maverick cannot be identified or when it is
not possible to determine the effect of a merger on the maverick's incentives. The
resulting approach to coordinated competitive effects analysis is illustrated with an
extended example involving oligopoly conduct in the U.S. passenger airline
The proposed passenger airline merger between United and US
Airways, abandoned in mid-2001,1 would have reduced the number of
major U.S. airlines from seven to six.2 Following a traditional anti-
* Associate Professor of Law, Washington College of Law, American University, and
Editorial Chair, Antitrust Law Journal. A.B., 1977, Harvard University; J.D., 1982,
Harvard Law School; Ph.D. (economics) 1986, Stanford University. From 1995 through
1998, the author served as Director, Bureau of Economics, Federal Trade Commission.
The author is grateful to Andy Gavil, Bill Kovacic, Tma Miller, Steve Salop, Keith
Waehrer, Spencer Waller, Bobby Wlllig, and Diane Wood; to participants in the law and
economics seminars at Harvard Law School and the University of Pennsylvania Law
School and in the Stanford/Yale Junior Faculty Forum; to numerous colleagues at Ameri-
can University; and to Tonya Esposito for research assistance.
1 DOJ Opposes Airline Consolidation; United and US Airways Cancel Deal, 81 Anti-
trust & Trade Reg. Rep. 96 (2001) (noting that merger agreement terminated shortly after
Justice Department opposition was announced on July 27, 2001).
2 See Trial Brief of the United States at 13 n.15, United States v. N.W. Airlines Corp.,
No. 98-74611 (E.D. Mich. filed Oct. 23,2000) (Major airlines at most include United Air-
lines, Delta Airlines, American Airlines, Northwest, Continental, US Airways and
TWA.); see also Frank Swoboda & Don Phillips, United to Acquire US Airways, Wash.
Post, May 24,2000, at Al (measuring size by number of miles flown by paying passengers,

Imaged with the Permission of N.Y.U. Law Review

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