HomePracticesServicesAccountingMerger Efficiencies Defense

As merger enforcement continues, the treatment of efficiencies remains relevant in agency review and litigation. Companies and counsel should be prepared to substantiate their efficiencies claims with persuasive arguments and data analysis.

At Cornerstone Research, our professionals have decades of experience supporting clients and expert witnesses in high-profile mergers by developing rigorous, credible efficiencies analyses that meet the high standards of the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC).

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Efficiencies, or cost savings anticipated from a merger combination, are often leveraged as a potential offset to concerns of reduced competition. However, under the DOJ/FTC Merger Guidelines, the standard for recognition remains high. Agencies require efficiencies to be verifiable, merger specific, and not achievable through means less anticompetitive than the proposed merger. This creates challenges for merging parties in assessing whether the proposed cost savings will ultimately be credited.

Cornerstone Research professionals and experts are skilled in addressing these challenges by relying on a combination of deep industry knowledge, practical expertise in working with the agencies and merging parties, and leveraging a sophisticated methodology to evaluate and substantiate efficiencies claims.

Our strategic approach to best position merging parties in all stages of litigation includes:

  • Developing an analytical foundation for efficiency claims
  • Building substantive data and documentation to verify the claimed savings
  • Stress-testing assumptions through sensitivity analysis and scenario modeling
  • Quantifying efficiencies across dimensions such as the impact on marginal costs or identifying those savings achievable in a product market or segment, including geographic factors
  • Differentiating between cognizable efficiencies (those that meet DOJ/FTC standards) and non-cognizable claimed savings

By applying this approach, we can identify and evaluate the savings that are most likely to be credited and impact antitrust issues.

We frequently work alongside leading academic and industry professionals who serve as testifying experts in merger cases. To support these experts, we:

  • Assist with data-driven expert reports that translate rigorous analysis and complex concepts into clear, persuasive arguments
  • Prepare experts for deposition and trial testimony
  • Collaborate with counsel in anticipating and rebutting opposing expert testimony

Our efficiencies expertise is more than litigation support. We assist clients before deals are announced or filed, as well during the merger review process. This proactive consulting can provide an opportunity to strengthen an efficiency defense.  We collaborate with clients by:

  • Preparing internal documentation and data that support efficiency claims
  • Evaluating whether proposed efficiencies are likely to be recognized as cognizable
  • Assisting with agency presentations and document and data production
  • Conducting analyses and providing support for expert white papers

Our professionals demonstrate their experience in merger efficiencies analysis through research and thought leadership. We have authored several articles that demonstrate the importance of building an efficiencies case that is both analytically sound and persuasive, including:

Our experience spans various sectors, including healthcare, technology, energy, and consumer products, where efficiencies analyses have played a pivotal role in merger reviews. Important litigation we have been involved in includes:

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Our staff consultants contribute expertise in economics, finance, accounting, and marketing, as well as business acumen, familiarity with the litigation process, and a commitment to provide outstanding support.