Are our merger analysis methods well suited to tackle AT&T / Time Warner?

[Commentary] What few commentators have so far identified is that the body of competition law instruments likely to be called upon to examine these mergers may not be well suited to analyze a modern economy consisting of complex, interconnected internet platforms serving a market of heterogeneous individuals.

The “Structure-conduct-performance” model is dead: Competition law has long been predicated upon the “Structure-Conduct-Performance” view of economic interaction. Market structure (the number of firms in the market, the ease of entry and exit by new firms) governs the conduct of firms (how they interact upstream with suppliers and downstream with customers), which determines market performance (the distribution of the gains arising from those interactions).

Long live multi-sided platforms and complex systems: The disintermediating effect of the internet has enabled consumers to interact directly at many different points along the value chain, often simultaneously.

Modern media mergers are messy: Applying any requirement for competitive neutrality (e.g. undoing apparently anti-competitive cross-subsidies) in just one of these markets will lead to ripples across all of the interconnected platforms as complex relationships recalibrate to the new settings.

[Howell is a faculty member at the School of Management, Victoria University of Wellington, New Zealand.]