THE CHURCH REPORT'S ANALYSIS OF VERTICAL AND CONGLOMERATE MERGERS: A REPLY TO COOPER, FROEB, O'BRIEN, AND VITA

I respond to concerns raised by James Cooper, Luke Froeb, DanO'Brien, and Michael Vita regarding the analysis of verticaland conglomerate mergers contained in my report to the EuropeanCommission. I address their arguments that the raising rivals'costs literature does not support an aggressive stance on verticalmergers; that market power is a necessary, but not a sufficient,condition for a non-horizontal merger to raise antitrust concerns;and that efficiencies intrinsic to a non-horizontal merger shouldbe treated in the second step of the proposed structured ruleof reason framework.