Although horizontal merger analysis typically focuses on substitution, complementarity – in which the demand for one product increases with a decrease in the price of the complement – can also have implications for merger analysis that may be particularly underappreciated in the context of mergers of multiproduct firms. Failing to analyze to procompetitive effects of complementarity could result in falsely condemning a procompetitive or benign merger and, ultimately, reduce consumer welfare.

Brattle Principal and Co-Leader of Brattle’s Global Antitrust & Competition practice Dr. Loren Smith recently coauthored an article proposing an approach to weighing the economic effects of substitutability and complementarity in mergers of multiproduct firms, discussing the practical implications of doing so. The article, “The Other Side of the Coin: Complementarity in Mergers of Multiproduct Firms,” was published in Antitrust Magazine and is available for download below.

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The Other Side of the Coin - Complementarity in Mergers of Multiproduct Firms