Proper Treatment of Buyer Power in Merger Review

  • Dennis W. Carlton
  • Mark Israel


In this paper, we assess the appropriate treatment of buyer power in merger review. We conclude that, for changes in bargaining outcomes due to a buyer merger to create efficiencies, it must be the case that, post-merger, the parties are able to arrive at a more optimal price schedule, perhaps due to reduced transactions costs. Empirical tests will be important to the evaluation of such efficiencies. We further conclude that, under certain conditions, powerful buyers may be able to prevent higher prices from a merger of suppliers. Once again, empirical tests should guide the evaluation of this merger defense.


Buyer power Merger review Monopsony 


  1. Chipty T., Snyder C. M. (1999) The role of firm size in bilateral bargaining: A study of the cable television industry. Review of Economics and Statistics 81: 326–340CrossRefGoogle Scholar
  2. Noll R. (2005) ‘Buyer power’ and economic policy. Antitrust Law Journal 72: 589–624Google Scholar
  3. Raskovich A. (2003) Pivotal buyers and bargaining position. Journal of Industrial Economics 51: 405–426CrossRefGoogle Scholar
  4. Salop S. (2005) Anticompetitive overbuying by power buyers. Antitrust Law Journal 72: 669–715Google Scholar
  5. Steptoe M. L. (1993) The power-buyer defense in merger cases. Antitrust Law Journal 61: 493–504Google Scholar
  6. US Department of Justice and the Federal Trade Commission. (2010). Horizontal Merger Guidelines. Retrieved January 20, 2011, from

Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  1. 1.Booth School of BusinessUniversity of ChicagoChicagoUSA
  2. 2.Compass LexeconChicagoUSA
  3. 3.Compass LexeconWashingtonUSA

Personalised recommendations