This presentation by Nancy ROSE, Head of the Department of Economics and Charles P. Kindleberger Professor of Applied Economics, Massachusetts Institute of Technology (MIT), was made during the discussion “Out-of-Market Efficiencies in Competition Enforcement” held at the 141st meeting of the OECD Competition Committee on 6 December 2023. More papers and presentations on the topic can be found out at oe.cd/omee. This presentation was uploaded with the author’s consent.

1. ROSE - OECD ROUNDTABLE
Out of market efficiencies
in competition policy: An
economists’ perspective
Nancy L. Rose, MIT Economics & Harvard Kennedy School
OECD Roundtable on Out of Market Efficiencies
December 6, 2023
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2. The questions for enforcement
Out of market
benefits
? + ?
• What is needed to
consider OOM benefits?
• How costly would it be to
add OOM benefits to
decision-making?
• Are we likely over-
enforcing ?

3. Balancing across markets requires
determinations enforcers and courts are
not positioned to make
• Law generally dictates protection of competition within
markets, does not authorize cross-market balancing (legal)
• Balancing implicitly assumes that maximizing total permits
redistribution to leave every group at least as well off
• But enforcers and courts cannot redistribute
• Without redistribution, balancing requires assigning welfare
weight to each affected group
• Neither economists, enforcers nor courts are equipped or
empowered to do this
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ROSE – OECD ROUNDTABLE

4. Current practice likely minimizes
enforcement and error costs
• Requiring enforcers to consider possible out of
market benefits turns every analysis into an
economy-wide general equilibrium investigation
and analysis
• Despite little empirical support for widespread
realized efficiencies sufficient to offset harm even
within markets, at least in merger analysis
• And a cautionary tale from a merger cleared on
the basis of convincing cognizable efficiencies
(most of which were likely out of market?)
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ROSE – OECD ROUNDTABLE

5. MillerCoors JointVenture
N.Miller & M.Weinberg,Econometrica,2017
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Likely due to increased
coordination, despite efficiencies

6. And there is a safety valve:
Prosecutorial discretion for de minimum
harm and substantial out of market benefits
(caveat MillerCoors)
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ROSE – OECD ROUNDTABLE