Article: Challenges for Economic Analysis of Mergers Between Potential Competitors: Steris and Synergy, Antitrust (Vol. 30), Summer 2016
Authors: Jennifer Cascone Fauver, Subramaniam (Subbu)
The FTC’s failed challenge of the merger between Steris Corporation and Synergy Health in 2015 was based on the potential competition doctrine. In potential competition cases, the theory of harm depends on the predicted increase in future competition that consumers in a relevant market may be denied as a result of a merger.
This article uses the setting of the Steris-Synergy merger, and the arguments employed by the FTC and the merging parties as part of the Preliminary Injunction proceedings, to illustrate the challenges that economists face in analyzing mergers between potential competitors. Specifically, to the extent that the lack of current competition between the merging Parties precludes the use of analyses that are typically part of the merger review toolkit, economists have to resort to innovative workarounds involving the use of documents, such as strategic plans, customer statements and industry reports to gather the data needed for analysis of competitive effects. The article discusses the various sources that could be of use, and also outlines the caveats one ought to employ while using these sources as the basis of the analysis, using specific examples from the Steris-Synergy case to highlight some of the pitfalls involved. This article is particularly helpful to practitioners in thinking through the analyses that need to be undertaken to present a successful case the next time the FTC pursues litigation based on the potential competition doctrine.