FTC, DOJ Issue Draft Merger Guidelines

Industry groups blasted the agencies for relying on allegedly false beliefs about the economy and designing the guidelines in a way they said would chill merger activity. Advocates said the update is much needed to reflect markets that have been overrun by tech’s dominance.

The agencies issued 13 principles enforcers can use to decide what’s illegal. Mergers shouldn’t “significantly increase concentration in highly concentrated markets” or “eliminate substantial competition between firms,” “increase the risk of coordination,” eliminate “potential entrants,” “entrench or extend a dominant position” or “further a trend toward concentration,” the document said.

The guidelines update the agencies’ “enforcement manual to reflect the realities of how firms do business in the modern economy,” said FTC Chair Lina Khan. She noted in a separate statement that the agencies gathered more than 5,000 comments in their public review of the guidelines. Enforcers want the guidelines to “faithfully reflect the full scope of the laws that Congress passed and prevailing legal precedent,” she said. The guidelines will help enforcers stay true to Congress’ desire for agencies to “arrest unlawful mergers in their incipiency,” Commissioner Rebecca Kelly Slaughter said: “Individual mergers, particularly those that may not necessarily present the risk of substantially lessening competition in a particular relevant market when analyzed in isolation, ultimately further a trend towards a firm’s unlawful acquisition or exercise of market power.” Commissioner Alvaro Bedoya said the guidelines will help protect competition for labor. DOJ Antitrust Division Chief Jonathan Kanter noted there will be “a substantial process” for the public to weigh in on the draft guidelines. The public will have 60 days to comment on the guidelines once they are formally published.

The guidelines “lay out clearly the types of mergers that risk substantially lessening competition in violation of the Clayton Act,” said Public Knowledge Competition Policy Director Charlotte Slaiman. PK said it hopes courts will use the guidelines to protect consumers from anticompetitive mergers. Sen. Elizabeth Warren, D-Mass., applauded the draft document: “Giant corporations and their armies of lobbyists will cry foul at the prospect of more competition, but this action by the Biden administration is welcome news for American small businesses, workers, and consumers.”

The U.S. Chamber of Commerce and the Computer & Communications Industry Association criticized the guidelines. They will “upend decades of bipartisan consensus,” the Chamber said. Enforcers are peddling a “false narrative on concentration in our economy, are quick to dismiss the benefits and efficiencies mergers create for consumers, and ignore the positive impact mergers have on innovation,” said Executive Vice President-Chief Policy Officer Neil Bradley. CCIA said the guidelines will “lower the bar for what mergers would be presumptively illegal and would take the U.S. a step closer to European style competition rules by protecting some competitors from competition.” It doesn’t make legal or economic sense to create a special set of regulations for the tech sector, said President Matt Schruers. The guidelines’ declaration that mergers shouldn’t “further a trend toward concentration” means they shouldn’t be allowed at all, said Information Technology and Innovation Foundation President Rob Atkinson: “In the administration’s ideal world, government would break up big firms to attain a utopian small-firm, hyper-competitive economy. But since the administration cannot achieve that goal politically, it is trying to do the next best thing: ban all mergers.”