The "To Sue or Not to Sue" model as estimated for 1983-98 requires the following parameters entered as discussed below

• The first variable inputs the POST-MERGER Herfindahl index associated with the strongest (not necessarily the largest) competitive concern studied by the FTC. The HHI is a standard structural measure of concentration defined by summing the squares of the market shares of the firms in the market AFTER the merger (add shares of merging parties together). Shares should be defined in percentage terms so the index can range up to 10000.

• The second variable identifies an efficiency defense. Two values are possible, use 1 when the facts suggest the merger will generate merger-specific efficiencies in the area(s) of competitive concern and 0 when the no efficiencies exist or the efficiencies are not linked to merger. 0 should be used if the efficiencies exist only in markets unrelated to the competitive concern, unless these savings follow directly from the merger.

• The third variable defines the number of customer complaints identified in the investigation. As this number is unknown outside the FTC, the user needs to estimate this figure. If no information is available, the sample median of 2 should suffice. If the merger is strongly supported by customers use 0, while if the merger is opposed across the board try 10.

• The fourth variable lists the number of key analytical disagreements between the FTC's attorneys and economists. It can range from 0 for a strong case with total agreement that the market definition is correct, barriers to entry are present and a viable theory for a likely anticompetitive effect exists to zero when the staffs disagree on all three issues. Since the information should be unavailable to the user of the model, it must be estimated. If the facts available on the competitive issues (concentration, entry, anticompetitive theory) suggest the evidence on any of these points is weak use 1; if the facts on any two of these three points is weak use 2 and if the evidence on all three points is weak use 3. If all the evidence points to a strong case, use 0.

• The fifth variable lists the share of the deal subject to a competitive concern. As the variable is defined in PERCENTAGE terms it ranges from almost 0 to 100. In general, the ratio of sales in the acquired businesses subject to the competitive concern to the sales of the acquired entity should be used, although ratios of estimated values or number of retail outlets can suffice.

THE USER MAY WISH TO REVIEW THE MERGER GUIDELINES FOR MORE INFORMATION ON THESE ISSUES

Likewise, a user confused on the definition of disagreements on analytical issues may wish to obtain more information on the internal Commission analysis at Explanation of Data Requirements