The U.S. Department of Justice and the Federal Trade Commission recently updated the merger guidelines. The list of requirements are intended to ensure the compliance of federal antitrust laws on behalf of businesses engaging in mergers and acquisitions.
“Unchecked consolidation threatens the free and fair markets upon which our economy is based,” Attorney General Merrick B. Garland said in a July 19 news release. “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 anti-competitive mergers cause.”
The updates will also help agencies determine how mergers affect competition and the general modern economy, the release reported.
“Competitive markets and economic opportunity go hand in hand,” Assistant Attorney General Jonathan Kanter, of the Antitrust Division, said in the release. “Today, we are issuing draft guidelines that are faithful to the law, which prevents mergers that threaten competition or tend to create monopolies."
He noted the importance of adapting law enforcement tools to keep up with changes in markets and commercial realities, the release said. This will help protect competition in a way that reflects and accounts for intricacies of the modern economy.
"Simply put, competition today looks different than it did 50 — or even 15 — years ago," Kanter added, according to the release. "There will be a substantial process for the public to review and provide comments before we finalize these guidelines.”
The 13 regulations noted in the guidelines include the inability to increase concentration in an already highly-concentrated market due to a merger, shouldn’t eliminate competition between firms, should not increase the risk of coordination and shouldn’t eliminate potential new entrants into the concentrated market, the release said.
The indications also state merger deals and firm establishments should not lessen competition using a newly established firm’s products or services used by firm rivals, should not create market structures that could foreclose competition, nor seek a dominant position in its industry, according to the release.
If a merger forms part of multiple acquisition deals, or a multi-sided platform, the deal must be accessible for examination by the whole series, the release said.
“When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition,” the guidelines state in the release. “Mergers should not otherwise substantially lessen competition or tend to create a monopoly.”
The modifications are one of many requested by agencies since the establishment of the first merger guidelines in 1968, according to the release. Other amendments were made in 1982, 1984, 1992, 1997, 2010 and 2020. The plan to restructure the guidelines was initially revealed in January 2022, when the agencies proposed potential updates and revisions to the Horizontal Merger Guidelines, issued in 2010, and the Vertical Merger Guidelines issued in 2020.
In order to implement the changes, the agencies requested information from more than 5,000 members of the public, such as consumers, workers, state attorneys general, academics, businesses, trade associations, practitioners and entrepreneurs, academies and more during a 60-day long public comment period, and hosted four listening sessions to grasp a better understanding of the potential of mergers and acquisitions and undermine competitive markets, such as food, agriculture and healthcare, the release said.
“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,” FTC Chair Lina M. Khan said in the release. “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.”
