Understanding Early-Stage Merger Investigations: What Drives the Antitrust Agencies?*

Academic and popular scrutiny of merger challenges and their subsequent outcomes have captured increasing attention in recent years. Yet, while the FTC and DOJ (Agencies) are tasked with investigating an average of 1,633 (2001-2021) mergers annually, the Agencies’ early-stage merger investigations filter out the vast majority of mergers, leaving them unchallenged. In this paper, we provide what we believe to be the first quantitative analysis of the earliest stage in the merger enforcement process: the determination to formally assign a merger for early-stage scrutiny by one of the Agencies. Consistent with established Agency guidelines and economic theory, we find that industries with higher levels of horizontal mergers and industry concentration have higher rates of early-stage scrutiny, while industries with more competitors and new entrants are less likely to face such scrutiny. Furthermore, we find that industries which have been challenged in the recent past are more likely to face early-stage investigations. We also find that other factors not explicitly related to industry competition impact the Agencies’ early-stage scrutiny, including Agencies' funding per merger. We find no indication that the political party in power impacts the likelihood that mergers receive early-stage scrutiny.