An excellent piece from Marinescu, Dinan, and Hovenkamp: one of our working papers laying out how the analysis of how antitrust policy should be done given that compensated firms face their counter parties not just in the product but in labor markets. I think this is the most important thing I have seen out of our shop here at Equitable Growth this week*Ioana Marinescu, James G. Dinan, and Herbert Hovenkamp*: Anticompetitive mergers in labor markets: "Increased market concentration in labor markets threatens to facilitate coordinated interaction among employers that could lead to lower output and wage suppression in employment markets...
...Because most mergers are challenged prior to their occurrence, the threat is not of observed coordinated interaction, but rather of an “appreciable danger” that it may occur if the merger is permitted to proceed. We outline the major issues that enforcers are likely to encounter in assessing mergers threatening competitive harm in labor markets. Mergers affecting the labor market require some rethinking of merger policy.... Horizontal mergers threatening labor market competition present a significant competition problem but also unique legal issues.... Labor market concentration... is very high, perhaps as high or higher than product market concentration. This suggests that a mature policy of pursuing mergers because of harmful effects in labor markets could yield many cases.... Those reviewing mergers cannot simply assume that lack of competition in the product market entails the same for the labor market...
#shouldread
