The Federal Trade Commission (FTC) and the Department of
Justice (DOJ) recently finalized their 2023 Merger Guidelines, which include 11
enforcement principles intended to address excessive market consolidation
across industries.
The agencies said the new guidelines are meant to reflect
modern market realities, advances in economics and law, and the experiences
reported by various market participants and are the culmination of nearly two
years of public engagement.
“Fair, open, competitive markets have been essential to
America’s dynamic, thriving economy, and policing unlawful mergers is our front
line of defense against harmful corporate consolidation,” FTC Chair Lina Khan
said in a release. “The 2023 Merger Guidelines reflect the new realities of how
firms do business in the modern economy and ensure fidelity to statutory text
and precedent. I am grateful for the thousands of comments submitted by
American workers, consumers, entrepreneurs, farmers, business owners, and other
members of the public. This input directly informed the guidelines and allowed
us to pursue this work with a deeper understanding of the real-life stakes of
merger enforcement.”
The new guidelines align with antitrust policies implemented
by the Biden administration and will replace the 2010 Horizontal Merger
Guidelines, implemented under former President Barack Obama. Additionally, the
2020 Vertical Merger Guidelines will be rescinded.
Proposed in July 2023 and subject to five months of public
comments, the new version maintains key elements from the proposal but softens
language on presumptions of illegality, to make them eligible for rebuttal and
emphasize certain thresholds as inferences.
The enforcement principles described in the new guidelines
are:
·
“Guideline 1: Mergers raise a presumption of
illegality when they significantly increase concentration in a highly
concentrated market.
·
“Guideline 2: Mergers can violate the law when
they eliminate substantial competition between firms.
·
“Guideline 3: Mergers can violate the law when
they increase the risk of coordination.
·
“Guideline 4: Mergers can violate the law when
they eliminate a potential entrant in a concentrated market.
·
“Guideline 5: Mergers can violate the law when
they create a firm that may limit access to products or services that its
rivals use to compete.
·
“Guideline 6: Mergers can violate the law when
they entrench or extend a dominant position.
·
“Guideline 7: When an industry undergoes a trend
toward consolidation, the agencies consider whether it increases the risk a
merger may substantially lessen competition or tend to create a monopoly.
·
“Guideline 8: When a merger is part of a series
of multiple acquisitions, the agencies may examine the whole series.
·
“Guideline 9: When a merger involves a
multi-sided platform, the agencies examine competition between platforms, on a
platform, or to displace a platform.
·
“Guideline 10: When a merger involves competing
buyers, the agencies examine whether it may substantially lessen competition
for workers, creators, suppliers, or other providers.
·
“Guideline 11: When an acquisition involves
partial ownership or minority interests, the agencies examine its impact on
competition.”
Comments received by federal regulators highlighted concern
about excessive market consolidation across industries and urged the agencies
to strengthen their approach to merger enforcement, the agencies stated. During four
listening sessions, business owners, workers and other advocates asked
regulators to address concerns that mergers and acquisitions could potentially
undermine open, vibrant and competitive markets across several industries.
The 2023 Merger Guidelines are not legally binding by
themselves but are designed to provide transparency into the agencies’
decision-making process, according to the release. This also was true of the
horizontal and vertical merger guidelines replaced by the 2023 version.
Additionally, the 2023 Merger Guidelines do not predetermine
the agencies’ enforcement actions, despite identifying factors and frameworks
the agencies consider when investigating mergers. The agencies noted in the
release that their enforcement decisions will be based solely on the facts and prosecutorial
discretion and judgment in all cases.