THE APPROPRIATE DECISION STANDARD FOR SECTION 7 CASES.

The burden of proof to determine the “reasonable probability” that a merger violates Section 7 is not clear. Using the insightful puzzlement expressed by the court in the recent Bertelsmann merger case as a starting point, this short article explains the confusion arising from the fact that the evidentiary burden on the plaintiff is to show that it is at least “more likely than not” that a merger “may be” substantially to lessen competition. This amounts to a standard that requires establishing a sufficient probability of exceeding another specific probability—that is, a “probability of a probability.” Analysis of the legislative history of Section 7, merger case law, and the record of recent merger enforcement suggests that false negatives (including under-deterrence) should be seen as raising greater competitive concerns than false positives (including over-deterrence), whereas Section 2 tends to worry more about false positives than false negatives. This analysis also suggests that the Section 7 “reasonable probability” standard (along with variants such as “appreciable danger” and “reasonable likelihood”) should not require the plaintiff to provide sufficient evidence to satisfy a more-likely-than-not probability standard. The plaintiff should have a lower evidentiary bar, one that is limited to showing by a preponderance of the evidence that the merger “may be” likely to substantially lessen competition, which amounts to a more interventionist standard. Similarly, the standard of proof for potential entry mergers of “noticeably more than fifty percent” applied by the court in the FTC’s Meta-Within merger case makes no economic sense. [ABSTRACT FROM AUTHOR]