WHAT PAST AGENCY ACTIONS SAY ABOUT COMPLEXITY IN MERGER REMEDIES, WITH AN APPLICATION TO GENERIC DRUG DIVESTITURES

By Eric Emch, Thomas D. Jeitschko, and Arthur Zhou¹

I. INTRODUCTION

Traditionally, antitrust agencies have drawn a hard line between "structural remedies" for merger harm, which are favored when available, and "behavioral remedies," which generally are not. A recent speech from the Assistant Attorney General Makan Delrahim echoed this longtime stance, and arguably drew an even harder line between the two approaches

In the antitrust context, "structural remedies" refers to remedies involving the sale of key assets³ by the merging firms to a third firm in order to create a new competitor to replace the competition lost by the merger.⁴ "Behavioral remedies," also known as "conduct remedies," refers to restrictions on the post-merger conduct of the merged firm designed to prevent the exercise of market power.⁵ Behavioral remedies have historically been seen as more difficult to design, implement and monitor, and ultimately as less likely to be effective, than structural remedies.⁶ Structural remedies, in contrast, have been seen as requiring only a targeted intervention to create a market structure that prevents the exercise of post-merger market power. Structural remedies are seen as having the virtue of not legislating a firm to act against its interests, and not requiring substantial ongoing monitoring by the agencies.⁷