Review of Industrial Organization
12: 693–700, 1997.
1997 Kluwer Academic Publishers. Printed in the Netherlands.
The Tenacity of Antitrust Mythology: Dissenting
Department of Economics, Columbia University, New York, NY 10027, U.S.A.
Abstract. This comment registers the author’s reservations about Professor D.C. Mueller’s proposals
for revising federal merger policy and about the arguments that he advances in support of them. The
comment especially questions the validity of the practice of using concentration data as the basis
for inferring the presence or absence of monopoly power. It is argued that the analytical foundation
for this practice is non-existent and that the purely statistical foundation is weak. The author ﬁnds
persuasive Mueller’s argument that, in recent decades, the merger activity of large ﬁrms has done
little or nothing to increase the efﬁciency of the American economy. He believes that, right or wrong,
what drives antitrust is fear of corporate size and power, not fear of textbook monopoly. Therefore,
he believes consideration should be given to Mueller’s proposal that the ambitious merger projects of
large ﬁrms should not be allowed to go forward unless they promise some gain in efﬁciency.
Key words: Mergers, merger guidelines, concentration, corporate size.
Professor Dennis Mueller has delivered a tightly wrapped package of history,
insight, statistics, and arresting conjecture. Where to begin the unwrapping? I
would start with what I believe to be his two main assumptions: (i) The success
of the antitrust laws in blocking and discouraging mergers has helped to preserve
“competition” in the American economy – and by implication has increased eco-
nomic welfare as economists understand the term. (ii) The economy could be made
even more competitive, and presumably better off, if the antitrust laws were used
to block more mergers.
As articles of faith, these two assumptions are either a part of one’s secular
religion or they are not. Still, while religious overtones can be detected throughout
Mueller’s article, it is clear that his intent is to ground his analysis on propositions
that are, in principle at least, testable. Propositions that have actually been tested
are, of course, extremely rare in debates and discussionson antitrust. This condition
reﬂects both the high cost of testing and the scarcity of parties willing to bear these
Mueller reasonably argues that a merger may reduce economic welfare in one
or both of two ways: by reducing competition and/or by reducing efﬁciency – by
I should like to thank Professor John Lopatka and Professor Elliot Zupnick for their help with
the preparation of this comment. Kindness does not implicate or incriminate.