Rev Ind Organ (2011) 39:137–143
Considerations of Countervailing Power
Roger D. Blair · Christina DePasquale
Published online: 17 July 2011
© Springer Science+Business Media, LLC. 2011
Abstract The 2010 Horizontal Merger Guidelines set forth the current antitrust
enforcement practices but do not address mergers that result in bilateral monopoly.
We show that, given the presence of lawful, enduring market power, such mergers
may improve social welfare. As a result, these mergers deserve careful scrutiny before
condemning them as anticompetitive. In this paper, we address this issue and suggest
an economically sound enforcement policy.
Keywords Bilateral monopoly · Countervailing power · Merger guidelines
The 2010 Horizontal Merger Guidelines set forth the current enforcement practice and
philosophy of the Department of Justice (DOJ) and the Federal Trade Commission
(FTC). These Guidelines explicitly recognize the competitive significance of monop-
sony (Section 12). Given the heightened awareness of the dangers of monopsony, this
is a welcome addition. Separately, the Guidelines also acknowledge the role of pow-
erful buyers in blunting monopoly power (Section 8), but appear to minimize their
Consequently, there is a hole in the Guidelines. Specifically, the Guidelines fail
to deal with the antitrust issue posed by mergers that create bilateral monopoly—a
We thank our respective institutions for ﬁnancial support.
R. D. Blair (
Department of Economics, University of Florida, P.O. BOX 117140, Gainesville, FL 32611-7140, USA
Ross School of Business, University of Michigan, Ann Arbor, MI, USA