Add to ORKGIn 2010, the Federal Trade Commission (FTC) stated that mergers between incumbents and future rivals may be anticompetitive. Lacking evidence, however, this statement was never used in litigation. This study empirically examines the statement. In 2012, an incumbent pharmaceutical firm acquired a promising future rival that was expected to enter competition within two years. First, I find strong evidence that, immediately after the merger, the incumbent boosted its existing drug prices. Second, the merger indirectly boosted the incumbent’s quantity of sales: higher drug prices increased the marginal returns on advertisement, and realizing that, the incumbent amplified its advertisement expenditures after the merger, and achieved a higher qua...