On July 19, 2023, the Federal Trade Commission (FTC) and Department of Justice Antitrust Division (DOJ) (together, Agencies) published for public comment the draft of their updated Merger Guidelines (Guidelines). The new Guidelines closely describe current Agency practice including novel theories of harm that the Agencies have advanced in investigations and in courts under the current administration.
The Guidelines amend, replace and consolidate the Horizontal Merger Guidelines published in 2010 and the Vertical Merger Guidelines published in 2020. The Guidelines and their predecessors are not legally binding but historically provided some predictability to the private bar and merging parties when evaluating the antitrust risk of proposed transactions.
The new Guidelines place an emphasis on transactions that tend to create a monopoly, advance new theories of harm relating to competition in labor markets and codify aggressive new thresholds for what transactions the Agencies view as presumptively illegal.
- Emphasis on the "Tend to Create a Monopoly" Prong of Clayton Act Section 7: The new Guidelines reflect a renewed emphasis on the second part of Section 7 of the Clayton Act which prohibits mergers and acquisitions whose effect would be to substantially to lessen competition or tend to create a monopoly. For example, the Guidelines suggest that the Agencies will focus on transactions in "highly concentrated markets," in markets in which a deal party has "dominant position" or "during a trend towards concentration."
- Labor Market Considerations: The new Guidelines describe how the Agencies analyze proposed transactions for reductions in labor market competition to determine whether the post-transaction firm would have the ability to decrease wages or degrade employee benefits and working conditions.
- Creation of Structural Presumptions: The Guidelines advance several new presumptions that proposed transactions would harm competition including based on market concentration, trends toward consolidation, supplier relationships and market dominance.
The new Merger Guidelines are subject to a 60-day public comment period, closing on September 18, 2023.
We continue to analyze the proposed Guidelines and are happy to discuss their impact on your business. Specifically, we are evaluating the potential impact of these on certain industries. If you would like to be notified of our future commentary on the proposed guidelines, please click here to choose from a list of subject matter areas.
Please join us for a Competitive edge: Quick take webinar on the New Merger Guidelines on Tuesday, August 1, at 11:00 am Eastern.
