FTC Looks to Modify Merger Guidelines In the Wake of High-Profile Defeats

The Federal Trade Commission is looking to adjust the rules and guidelines used to evaluate mergers following a string of high-profile defeats....
FTC Looks to Modify Merger Guidelines In the Wake of High-Profile Defeats
Written by Staff
  • The Federal Trade Commission is looking to adjust the rules and guidelines used to evaluate mergers following a string of high-profile defeats.

    The FTC has worked to stop mergers it believes will hurt competition, but has a mixed track record at best. The agency has suffered a number of high-profile defeats in court, most notably in the case of Microsoft’s acquisition of Activision Blizzard.

    In response, the FTC has drafted new rules that will make it easier to challenge mergers that threaten competition, or consolidate too much control in the hands of one company. The agency is seeking public comment on the new rules.

    The new guidelines are based on thirteen principles the agency will use to evaluate prospective mergers:

    • Mergers should not significantly increase concentration in highly concentrated markets.
    • Mergers should not eliminate substantial competition between firms.
    • Mergers should not increase the risk of coordination.
    • Mergers should not eliminate a potential entrant in a concentrated market.
    • Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.
    • Vertical mergers should not create market structures that foreclose competition.
    • Mergers should not entrench or extend a dominant position.
    • Mergers should not further a trend toward concentration.
    • When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series.
    • When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform.
    • When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers.
    • When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition.
    • Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

    Officials at the FTC and DOJ emphasized the need for revised laws to help keep markets free, fair and competitive.

    “Open, competitive, resilient markets have been a bedrock of America’s economic success and dynamism throughout our nation’s history. Faithful and vigorous enforcement of the antitrust laws is key to maintaining that success,” said FTC Chair Lina M. Khan. “With these draft Merger Guidelines, we are updating our enforcement manual to reflect the realities of how firms do business in the modern economy. Informed by thousands of public comments—spanning healthcare workers, farmers, patient advocates, musicians, and entrepreneurs—these guidelines contain critical updates while ensuring fidelity to the mandate Congress has given us and the legal precedent on the books.”

    “Unchecked consolidation threatens the free and fair markets upon which our economy is based,” said Attorney General Merrick B. Garland. “These updated Merger Guidelines respond to modern market realities and will enable the Justice Department to transparently and effectively protect the American people from the damage that anticompetitive mergers cause.”

    “Competitive markets and economic opportunity go hand in hand. Today, we are issuing draft guidelines that are faithful to the law, which prevents mergers that threaten competition or tend to create monopolies. As markets and commercial realities change, it is vital that we adapt our law enforcement tools to keep pace so that we can protect competition in a manner that reflects the intricacies of our modern economy. Simply put, competition today looks different than it did 50 — or even 15 — years ago.” said Assistant Attorney General Jonathan Kanter of the Antitrust Division. “There will be a substantial process for public to review and provide comments before we finalize these guidelines.”

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