What does "on the Merits" Mean?

“On the merits” is a term that has its roots in the law: a judge, having reviewed the materials relevant to a lawsuit, may render a verdict based not on issues of procedure or other technicalities, but strictly on the facts introduced into evidence and the law as it applies to those facts. A judge who decides a case on the merits considers that any technical or procedural issues that have been raised are either dealt with or irrelevant. The purpose of deciding cases in this way is to ensure that justice is done, rather than reward or punish one of the parties unfairly because of adherence to, or failure to follow, procedural requirements.

The concept of deciding legal cases on the merits has its origins in English law, where it was understood that the strict application of the common law might sometimes produce unjust decisions. A popular example of this is the existence of deadlines for filing motions — the fact that a party to a case, or his lawyer, should be penalized with automatic loss of a case for a relatively minor transgression is antithetical to the concept of justice or inequity. This doesn’t mean that the law itself is disregarded, or that procedural and technical requirements are ignored; rather it means that the case itself is decided solely on the evidence and the law’s application to the evidence, and any consequences for technical and procedural errors will be administered outside the confines of the specific case. Deciding cases on the merits reinforces the idea that the law is not a set of loopholes and technicalities weighted against the average citizen, but a resource available for guaranteeing justice to all.

Another area that has increasingly incorporated “on the merits” into its vocabulary is the business world, especially when dealing with the concept of competition. There’s a great deal of controversy over the competitive tactics and strategies employed by companies that are dominant, either in a geographic or industrial market, where the focus is on whether a particular competitive behavior promotes or damages competition. This concept attempts to evaluate such behavior on its effects, rather than on its form. For example, promoting “loss leaders” to draw customers to a store is an accepted practice employed by many companies. When considering competitive strategies on the merits, though, the use of loss leaders can sometimes be seen as harmful if the employment of the strategy forces the competition out of business, especially if it can be shown that the dominant competitor abused its dominance.

The controversy arises over the fact that some nations that have legislation codifying competition policy consider the form of a competitive practice, while others consider its effect. When the form is the prime consideration, as long as a particular strategy is legal, all players in a market may employ it, even if it means that some smaller competitors may be driven from the market. Other nations’ policies and legislation are ambiguous, making it more difficult for businesses to formulate conduct with acceptable legal parameters.

There’s still controversy, though, since consensus on what’s good or bad for competition is hard to reach. In the case of a loss leader, for example, there’s legitimate disagreement about when competition has been harmed. For example, some suggest that driving any competitors out of business is an unacceptable harm to competition, while others hold that robust competition will inevitably push less-efficient players out of the market. “On the merits,” then, is a phrase used both in the law and in business to describe a process of decision-making oriented toward achieving justice.