The Philadelphia National Bank (PNB) presumption refuses to die. Long criticized and widely viewed as bad policy, it survives today in slightly attenuated form, and there is no sign that Trump-appointed antitrust enforcers plan to bury it. If anything, the 2023 Merger Guidelines, still in force, double down on the presumption more than their predecessors. Public choice theory helps explain this resilience. And because merger review must by its nature move swiftly, the U.S. Supreme Court is unlikely to step in anytime soon.
Still, the story is not static. Antitrust enforcers in the second Trump administration have “signaled a real tone shift in U.S. merger enforcement” that “recognize[s] many mergers are procompetitive.” If that shift carries through to how agencies apply the PNB presumption, it could meaningfully limit the economic harm the doctrine has long threatened to impose.
The Long Shadow of Philadelphia National Bank
In its 1963 U.S. v. Philadelphia National Bank decision, the Supreme Court held that a merger creating a firm with an “undue percentage share of the relevant market” is presumptively illegal under Section 7 of the Clayton Act. In practice, that meant market shares of roughly 30% or more, depending on concentration. This rule—now known as the PNB presumption—puts the burden on merging firms to show their deal will not substantially lessen competition. If they do, the government must respond with additional evidence of harm, while retaining the ultimate burden of persuasion.
The PNB presumption has endured for more than 60 years, even as the structural theories that once supported it were largely discredited by the late 1970s. That persistence alone invites scrutiny. What follows briefly lays out the main arguments for keeping the presumption, and the stronger case for letting it go.
The Economic Rationale for the PNB Presumption
Supporters of the PNB presumption start from a simple claim: high concentration makes competitive harm more likely. Decision theory therefore supports a rule of thumb—when a merger significantly increases concentration, illegality should be presumed.
- Predictability and Efficiency: The presumption gives enforcers a practical and efficient way to flag mergers most likely to be harmful. It also tells businesses, in plain terms, how Section 7 of the Clayton Act will be enforced.
- Preventing Anticompetitive Effects: The theory of harm is straightforward. Mergers between major rivals in concentrated markets eliminate head-to-head competition, expand market power, raise prices, narrow choices, and dull incentives to innovate. These are all costs that generally fall on consumers.
- Burden Shifting: The presumption shifts the burden to merging firms to show their deal won’t cause these harms. That shift reflects a judgment call: better to risk “false positives” (blocking procompetitive mergers) than to allow “false negatives” (allowing anticompetitive mergers to proceed) that lock in durable market power and long-term consumer losses.
- Foundation in Economic Theory: The presumption is grounded in a basic economic assumption that removing a major competitor in a concentrated market will likely enhance market power, especially where entry barriers make new competition slow or unlikely to arrive.
The Case Against Guilt by Market Share
Critiques of the PNB presumption follow from the evolution of economic theory toward questioning the idea that market structure alone predicts competitive harm. As John Taladay put it in a 2024 piece in Concurrences, “[i]n the absence of a high probability or certainty of anticompetitive harm, the use of presumptions is not appropriate,” and the PNB presumption should therefore be shelved.
- Outdated Economic Theory: The core objection is that the PNB presumption is a holdover from the mid-20th-century “structure-conduct-performance” model, long abandoned by modern industrial organization, which no longer treats concentration alone as a reliable proxy for harm.
- Ignores Efficiencies and Nuance: The presumption also flattens real-world complexity. By focusing on market shares, it risks ignoring efficiencies, new forms of rivalry, and future competitive pressures that fall outside narrow market definition but still discipline firms in practice.
- Procedural Concerns: Critics note the presumption asks too little of the government and too much of defendants. Market share alone can trigger a heavy burden shift, even when evidence of actual harm is thin or speculative.
- Overemphasis on Market Definition: PNB relies heavily on the “messy process” of defining a relevant market, which invites gamesmanship by either side to trigger or avoid the presumption. Outcomes can turn less on economics than on how cleverly lawyers draw market boundaries.
- Weakens Market for Corporate Control: The market for corporate control, including hostile takeovers, helps to discipline underperforming managers and ensure a company’s assets are in the hands of those who can manage them most efficiently. By making mergers easier to challenge and harder to defend, it discourages takeovers that could replace weak management, redeploy assets more efficiently, and create value. The result is less discipline, less dynamism, and a weaker economy overall.
An Uneasy Truce Over an Aging Rule
There is no scholarly consensus on whether the PNB presumption should survive. Even many who resist abandoning it concede that its force has weakened as economic learning has advanced.
Steven Salop struck a careful middle ground in a 2015 Antitrust Law Journal article. He traced how enforcement agencies gradually recognized the limits of structural merger analysis, a shift reflected in the 2010 Horizontal Merger Guidelines. As Salop explained:
[The PNB] presumption, and its associated high burden of production placed on rebuttal evidence, was based on an economic view widely accepted at the time regarding the likely anticompetitive impact of such mergers. The economic presumption has become weaker over time, and that has led to the rebuttable presumption also becoming weaker. However, the basic “quick look” structure remains central in the law. The antitrust agencies also have adopted enforcement presumptions that reflect the economic evidence and the way in which the courts have applied the PNB rebuttable presumption. Looking forward, as economic analysis has advanced, alternative measures have been developed that can supplement or even eventually replace concentration as a basis for anticompetitive legal and enforcement presumptions. Thus, merger law can continue to evolve, while retaining the vitality of PNB’s basic decision-theoretic approach.
Herbert Hovenkamp and Carl Shapiro took a more enthusiastic view in a 2018 Yale Law Journal article, arguing that the presumption “has . . . proven essential to effective merger enforcement” and remains “strongly supported by economic theory and evidence.” Their support rested in part on the claim that courts now recognize an efficiency defense.
But that claim sits uneasily with the U.S. government’s July 2025 Note to the OECD on Merger Control, which stressed that “U.S. courts, including the Supreme Court have not recognized efficiencies as a defense to an otherwise illegal merger.” Former Federal Trade Commission (FTC) Commissioner Christine Wilson had earlier raised this concern in a 2020 speech, warning that FTC and U.S. Justice Department (DOJ) leadership still give efficiencies short shrift in merger analysis and antitrust enforcement.
Joshua Wright and Judge Douglas Ginsburg were more direct. Writing in the Antitrust Law Journal in 2015, they concluded:
If the economic foundation of PNB’s structural presumption is no longer supported by sound economics—and it has not been for quite some time—then the presumption ought to go the way of the agencies’ policy decisions to drop enforcement of the Robinson-Patman Act and reliance upon the discredited antitrust theories approved by the courts in such cases as Brown Shoe, Von’s Grocery, and Utah Pie.
Ironically, while Utah Pie remains largely frozen out, Brown Shoe has enjoyed a revival—most notably in the 2023 Merger Guidelines—and even support for the Robinson-Patman Act appears to be stirring.
A 2023 study by Scalia Law School’s Bruce Kobayashi and former FTC Chairman Timothy Muris made the case against retaining the PNB presumption in blunt terms:
However attractive old Supreme Court decisions may make structural presumptions, such guidance would be wrong on the facts, wrong on the law, and wrong on policy. Wrong on the facts because, as in the 1960s with the simple market concentration doctrine and with reliance on . . . [a] . . . fatally flawed 1948 [FTC] study, there is no empirical support today to fear harm from rising concentration and, hence, no support for renewed structural rules. Wrong on the law because, led by the Supreme Court, the courts have rejected the anti-consumer Warren Court antitrust jurisprudence. Although the Court has not decided a contested case involving substantive merger analysis in nearly 50 years, there is every reason to believe that it would apply its consumer-centric approach used elsewhere to mergers. Finally, wrong on policy because modern merger law, well reflected in the 2010 Horizontal Merger Guidelines, their acceptance by the judiciary, and the daily practice before the agencies, also reflects that consumer-centric philosophy.
Yet the 2023 Merger Guidelines moved sharply in the opposite direction, strengthening structural presumptions against mergers. Using simulated merger data, economists Matt Wohlleben and Davide Bernardini found that the new guidelines “may significantly increase the number of mergers flagged for review, reducing the false-negative rate but dramatically raising the false-positive rate.”
That shift has already shown up in court. In 2024, two federal district judges relied on the guidelines’ lower concentration thresholds to preliminarily enjoin mergers in FTC v. Kroger and FTC v. Tapestry. So far, no court has rejected those new thresholds.
The Government Makes Its Case, Selectively
The U.S. government’s most recent defense of the strong structural presumption appears in a December 2024 note to the OECD titled “The Use of Structural Presumptions in Antitrust.” The note leaves little room for doubt about the agencies’ position:
In the . . . [DOJ’s and FTC’s] experience, the structural presumption provides a highly administrable and useful tool for identifying mergers that may harm competition. Modern economics and empirical research strongly support the predictive value of market structure measures as an indicator of harm from a merger. These insights are reflected in the approach to the structural presumption outlined by the Agencies in the 2023 Merger Guidelines.
The note, however, tells only one side of the story. It cites scholars who favor the presumption while ignoring prominent critics such as Ginsburg, Wright, Kobayashi, and Muris. It also sidesteps empirical work debunking the claim that rising concentration in the United States is widespread or economically harmful. And while it points to a handful of merger retrospectives suggesting competitive harm, those anecdotal findings do little to cure the presumption’s deeper analytical flaws.
The current leadership at the FTC and DOJ have made “statements reflect[ing] an emerging enforcement philosophy that acknowledges the central role of M&A in a healthy, innovative economy, particularly in the digital and technology sectors.” Even so, the 2023 Merger Guidelines remain in force, and there is no sign that either agency is rethinking its renewed commitment to the structural presumption.
A Public Choice Story of Survival
Public choice theory helps explain why the Philadelphia National Bank (PNB) presumption has endured despite sustained criticism of its structuralist economic roots. The answer is less about economics than incentives, including enforcement agencies’ self interest and desire for judicial efficiency.
- Lower Enforcement Costs: By tying illegality to market share and concentration, the presumption lets the DOJ and FTC make their case quickly and cheaply. From a public-choice perspective, agencies naturally favor rules that reduce evidentiary demands, conserve resources, and improve win rates.
- Curbing ‘Rent Seeking’: Open-ended antitrust inquiries invite the merging parties to flood the record with expert testimony. The PNB presumption functions as a “quick look” screen, limiting defendants’ ability to overwhelm regulators through litigation spending alone.
- Institutional Inertia Matters: Once established, legal rules create vested interests. Courts and agencies have built merger doctrine around the PNB baseline, including the familiar three-step burden-shifting framework articulated in Baker Hughes. Abandoning the presumption would require costly institutional recalibration, which bureaucracies rarely rush to do and interested parties have little incentive to seek.
To be sure, lower enforcement costs and limits on rent seeking can produce real benefits, but those gains come with serious tradeoffs. The presumption invites weak cases built on aggressive market definitions, downplays efficiencies (as reflected in the 2023 Merger Guidelines), and discourages welfare-enhancing deals before they are ever proposed.
Setting public choice considerations aside, the Supreme Court is also unlikely to step in. Since Congress amended the Expediting Act in 1974, the Court has largely exited the merger-review business. Government merger cases now go to the courts of appeals, with Supreme Court review available only if a district court certifies the case as one of “general public importance” and the Court agrees to hear it.
That path rarely makes sense in practice. Mergers are time-sensitive, and the delays inherent in appellate review—followed by the uncertainty of certiorari—often threaten the deal itself. As a result, the PNB presumption persists not because it is beyond question, but because the system makes it impractical and uneconomical to press the question.
Reforming PNB Without Repealing It
The Trump administration appears likely to keep invoking the PNB presumption. But it does not have to apply it rigidly. The agencies could preserve PNB as a rough screening tool while dialing back its tendency to block procompetitive, pro-innovation, pro-consumer deals—an approach fully consistent with the “MAGA antitrust” goal of a strong, dynamic U.S. economy.
The DOJ and FTC could do this without new legislation. They could signal a narrower use of PNB through speeches, guidance, or interpretive statements that supplement the 2023 Merger Guidelines. Over time, they could also adopt targeted revisions to those guidelines focused specifically on PNB. The DOJ Antitrust Division might even reinforce the shift by filing statements of interest in appropriate private antitrust suits.
Making the Presumption Rebuttable Again
The most effective way to rein in the PNB presumption is to give merging parties a real chance to show their deal won’t harm competition, or that it will affirmatively benefit consumers. That means treating rebuttal evidence as more than a formality.
- Take Efficiencies Seriously: PNB has long been read to bar weighing procompetitive gains in one market against harms in another, leaving efficiencies with “second-class status.” A sensible reform would explicitly credit merger-specific, verifiable efficiencies—such as lower production costs, improved product quality, or enhanced innovation—as valid grounds for rebuttal.
- Look Beyond Narrow Market Boundaries: Today, efficiencies realized outside the defined market are usually ignored. Allowing “out-of-market” efficiencies would better capture real consumer benefits, especially in digital markets where network effects blur market lines.
- Accepting Evidence of Dynamic Competition: The current structural presumption is based largely on static market-share data. Merging firms should be able to point to rapid technological change, ease of entry, and the “vigor of remaining competition” to rebut structural inferences of harm.
- Lowering the Rebuttal Burden: Requiring parties to show “clearly” that a merger poses no competitive risk stacks the deck against procompetitive deals. A more balanced standard would reduce false positives and keep beneficial transactions from dying on the vine.
Raising the Bar for Presumed Illegality
Another way to rein in the PNB presumption is to reset the concentration triggers that activate it.
- Raising Market Share/HHI Thresholds: The 2023 Merger Guidelines lowered the bar to a 30% combined market share and relatively modest Herfindahl-Hirschman Index (HHI) levels. Moving those triggers back toward the higher thresholds used in the 2010 Horizontal Guidelines would reduce the number of deals automatically flagged and spare many benign—or beneficial—mergers from an onerous rebuttal process.
- Focusing on HHI Changes, Not Just Levels: Screening based on the change in HHI, rather than the post-merger level alone, would better target transactions that meaningfully alter competitive conditions.
With any luck, current FTC and DOJ leadership—and the White House—will take these options seriously as they shape the next round of merger policy.
