In this article from the ABA International Committee Newsletter, the authors review the challenges of assessing anticompetitive pricing incentives in horizontal multi-sided platform mergers.
The 2023 Merger Guidelines devote an entire section, Guideline 9, to mergers of multi-sided platforms. Gross Upward Pricing Pressure Indices (GUPPIs) are commonly used to measure pricing incentives in one-sided markets; they are not directly applicable to multi-sided platforms due to the complex interactions between different sides of the market. The authors note that this is an important issue given the growth of the technology sector and the increasing number of mergers and acquisitions in this sector.
The paper also reviews the literature on applying GUPPIs to multi-sided platform mergers, highlighting challenges such as market interactions, indirect network effects, and price discrimination. The authors call for more comprehensive approaches to understand unilateral price increase incentives, emphasizing the importance of this research area due to the rise in technology sector mergers and potential for anticompetitive behavior.
This article was originally published in the ABA International Committee Newsletter in April 2024.
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