Review of Industrial Organization
12: 439–441, 1997.
1997 Kluwer Academic Publishers. Printed in the Netherlands.
Comment on Dewey’s “Merger Policy Greatly
Simpliﬁed/Building on Keyes”
LUCILE S. KEYES
2605 Thirty-ﬁrst Street, N.W. Washington, D.C. 20008, U.S.A.
Abstract. Professor Dewey’s mock proposal for a new merger policy differs from Keyes’ serious
proposal in at least two important respects. First, the Dewey plan would accord different treatment to
mergers which result in the growth of “large” industrial companies as compared with mergers which
do not. No such size discrimination is recommended by Keyes. Second, the Dewey plan would allow
even the former class of mergers to go forward after passing a purely procedural “test”. No genuine
“efﬁciencies defense” would be required.
Key words: Mergers, merger guidelines, antitrust policy.
In a recent article in this Review, Professor Donald Dewey has proposed, tongue-
in-cheek, the adoption of a brand-new antitrust policy which would give sharply
different treatment to mergers that result in the growth of “large” industrial com-
panies and those that do not. The dividing line between “large” and “non-large”
companies is not precisely deﬁned: the top class is tentatively designated as “the
500 largest” but the “cutoff ﬁgure is negotiable” (p. 397). All smaller industrial
companies are lumped together in the lower class. Mergers resulting in the growth
of any top class member would be permitted only if proponents could show “that
the merger is likely to confer some non-negligible consumer beneﬁt through cost
reductions, product improvement, increased research outlays or more rapid innova-
tion.” Mergers not resulting in growth of a “large” ﬁrm would be permitted without
exception. Because the title and some subsequent passages of Dewey’s article may
seem to the unwary reader to indicate a basic similarity between his mock proposal
and a serious proposal that I suggested in 1995, I feel compelled to point out that
in my opinion, there is no such similarity.
First and foremost, I certainly did not intend to advocate any two-tier policy
based on corporate size. Moreover, I do not ﬁnd in my article any ground for
the opinion that such a policy dichotomy is being advocated either overtly or in
verbal disguise. Referring speciﬁcally to mergers between rival sellers or buyers
(i.e., horizontal mergers) of entirely unspeciﬁed size, my article points out the
difﬁculty of evaluating the results of such transactions when they involve both
beneﬁts and detriments, since these results are generally incommensurable, and
suggests that one rule which might “deserve investigation would be to permit any