Thursday, April 5, 2012
Posted by D. Daniel Sokol
Gerg Werden (DOJ) has posted Mergers with Weak Competition: Reflections on FTC v. Lundbeck.
ABSTRACT: In FTC v. Lundbeck, courts rejected a challenge to an acquisition placing under common control the only two drugs for treating a heart defect in newborns. Although the court decisions in the case have been severely criticized, they might well have achieved the right result for the right reason. In a simple model reflecting the weak competition between the drugs found by the courts, duopoly nearly always yields monopoly or near monopoly pricing.