BENCHMARKING THE UPWARD PRICING PRESSURE MODELWITH FEDERAL TRADE COMMISSION EVIDENCE

Malcolm B. Coate

Journal of Competition Law and Economics, 2011, vol. 7, issue 4, 825-846

Abstract: The upward pricing pressure (UPP) model was introduced in the 2010 revision of the Merger Guidelines, although little insight was offered for how to operationalize an UPP screen. Abstracting from the potential for efficiencies, this article defines an UPP-related benchmark of 15 percent using data from a review of Federal Trade Commission merger challenge decisions. While the historical record highlights the importance of diversion ratios, the other key input into the UPP index, the margin, appears to play little role in the review process. A supplemental analysis of the case-specific evidence associated with unilateral merger review serves to confirm the benchmark results. Moreover, a detailed case study of unilateral-effects analyses identifies a number of application issues that may negate the finding of an UPP-based competitive concern. Thus, careful study should be undertaken before (1) using an UPP index as a merger screen with a benchmark well below 15 percent (diversions well below 30 percent), (2) customizing the UPP calculation for either high or low values of the margin, or (3) using an UPP index to impose a strong presumption of a competitive concern.

JEL-codes: K21 L40 (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1093/joclec/nhr014 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:7:y:2011:i:4:p:825-846.

Access Statistics for this article

Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

More articles in Journal of Competition Law and Economics from Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().