How The FTC Analyzes Efficiencies Claims

In a recent speech, FTC Bureau of Competition Director Deborah Feinstein discussed the FTC's approach to analyzing claims by merging parties that a merger will benefit consumers by creating efficiencies.

Feinstein began by outlining the relevant provisions of the Horizontal Merger Guidelines published jointly by DOJ and the FTC. As Section 10 of the Merger Guidelines recognizes, mergers can generate efficiencies that lead to "lower prices, improved quality, enhanced service, or new products." However, any efficiency benefits must be weighed against potential anticompetitive effects of the merger.

The FTC will credit efficiencies only where several criteria are met: (1) the efficiencies must be specific to the merger; (2) they must not be vague or speculative; and (3) they must be cognizable but cannot arise from anticompetitive reductions in output. Feinstein used the attempted Sysco/US Foods merger as a recent example where the parties' predicted efficiencies did