Reimagining Merger Analysis to Include Intent

Applications of Section 7 of the Clayton Act have been deficient in identifying and prohibiting anticompetitive mergers, particularly those involving the acquisition of nascent competitors in digital markets. While the language of the Clayton Act is flexible and broad, its implementation has evolved into a narrow, economic-focused analysis that requires (or expects) quantitative evidence to show competitive harm and establish a prima facie case. This approach sets an unusually high bar for plaintiffs when the mergers involve dynamic technology markets in which firms compete more on innovation than on price, primarily because the preferred economic tools are not well equipped to measure and predict innovation harms in the long run. The problems are exacerbated when dominant firms acquire nascent competitors because the potential competitive impact of their acquisition is inherently even more uncertain and therefore the quantifiable metrics even less helpful.

This Article makes a case for reimagining merger analysis to include intent to help satisfy the plaintiff’s evidentiary burden and strengthen merger enforcement. Insisting on, or strongly preferring, empirical data to demonstrate effects of a proposed acquisition when that data is unavailable means that merger law will fail in its core mission for at least certain types of mergers. Therefore, the better approach is to be open to the use of other sources of evidence, such as intent, to supplement standard economic evidence. This Article explains why and how intent evidence can be probative in predicting effects, particularly in the case of a dominant digital platform’s acquisition of a nascent rival.

To illustrate, this Article draws on the collection of emails and statements made by Facebook’s executives relating to the company’s famous acquisitions of Instagram and WhatsApp. Though many courts and commentators today are dismissive of the value of intent, integrating it into merger analysis would not require legislative action because the relevant statutory language is broad and no major case has barred its use. The Article concludes by addressing the main objections that critics have raised about the use of intent evidence in antitrust analysis generally.