Earlier this month, the Federal Trade Commission (FTC) issued its revised Premerger Notification Regulation under the Hart-Scott-Rodino Act. This rule requires firms that seek to engage in mergers above certain valuation thresholds to provide information to the FTC and Antitrust Division of the Department of Justice (DOJ) before they consummate the merger. The purpose of the program is to enable the agencies to review and, if necessary, block mergers that may substantially lessen competition under Section 7 of the Clayton Act. Much of the rule involves routine updates, but public attention has been more focused on the fact that the labor-related provisions proposed in the draft regulation had been eliminated in the new revision.
Why were these provisions eliminated? FTC Commissioner Melissa Holyoak provided the clearest answer when she called the labor provisions “a solution in search of a nonexistent problem” in her accompanying statement.As evidence, she cited numerous academic papers, most of them published in peer-reviewed journals or on their way, and nearly all of which show that labor market concentration, or similar frictions in labor markets, is a serious problem. In fact, I am aware of no academic paper that seriously contests the claim that thousands of labor markets are highly concentrated under traditional legal standards. These markets are concentrated enough to warrant, at a minimum, review by the agencies, based on their traditional practice for product markets.
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