Merger Regulations: A Trade-off between Efficiency and Equity

Abstract

Williamson proposes that the synergies arising from a merger are mostly larger than its deadweight losses. This implies that the economic benefits from a merger would outweigh its disadvantages from competition restraint. Hence, most of the merger cases could promote economic efficiency. If, pursuant to the provisions of Article 13 of the Fair Trade Law, the TFTC considers only economic efficiency but not political equity, then Williamson’s theory implies that a merger should not be prohibited by the law even though market power is created, consumers are hurt by price hikes, and poverty gap is further widened. Based on this, this article uses the perspective of New Institutionalism and global trend of law enforcement to show that the antitrust has to address both market failures and political issues (such as wealth concentration). Only from both economic and political considerations can antitrust achieve a balance between efficiency and equity.