John M. Yun


Nascent and potential competitors can represent a vital source of innovation and dynamic growth for an industry and, in the process, can discipline the exercise of market power from incumbents. Yet are those benefits extinguished before they can fully ignite when powerful incumbents acquire these nascent and potential competitors? Moreover, how does the acquisition of these competitors fit into the larger antitrust framework? This Article offers a number of propositions to address these concerns and questions in regard to competition that has not been fully realized. First, this Article offers a clear legal and analytical delineation between the doctrines of nascent and potential competition—as there has recently been a degree of “semantic satiation” between these two concepts. Second, some have argued that the acquisition of nascent competitors should be adjudicated using legal standards developed under the Sherman Act, § 2, which covers monopolization, rather than under the traditional Clayton Act, § 7, which governs mergers and acquisitions. Yet the counterfactual exercise is fundamentally different between ex ante merger evaluations (§ 7) and ex post monopolization claims (§ 2). Consequently, based on this fact alone, courts should be cautious to adopt § 2 approaches to § 7 issues. Third, when valuating the wider set of proposals to address the nascent and potential competition problem, which the Article comments on, we must ask whether there is a problem in the first place. To that end, this Article examines a number of recent merger retrospectives. Finally, while using the past to predict the future can be a difficult and uncertain exercise even within mature markets, these hinderances can be overstated. Economic tools are available to frame our approach, and agencies and courts should focus particularly on whether the characteristics and nature of the acquired nascent competitor are sufficiently differentiated from the remaining competitors to warrant increased scrutiny.

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