The Federal Trade Commission and the Justice Department’s antitrust division announced Wednesday long-awaited new guidelines on how to enforce merger laws.
The new guidance, now in draft form, outlines agencies’ efforts to keep pace with the digital age and changing marketplace. The proposed rules apply to both vertical and horizontal mergers. Nearly two years ago, the Federal Trade Commission (FTC) voted to rescind the previous version of its vertical merger guidance, issued in 2020, citing flaws.
A vertical merger is a transaction between two businesses that are usually located in different parts of an industry’s supply chain, According to the Federal Trade Commission. In contrast, a horizontal merger involves companies that compete or are in similar market segments.
microsoft Proposed $68.7 billion purchase Activision Blizzard is an example of a vertical merger, as Microsoft distributes games through its Xbox console and streaming service, while Activision creates them. The Federal Trade Commission challenged the deal, arguing it was anticompetitive, but the court last week rejected the regulator’s request to block it.
Under Chairman Lina Khan, the FTC has more aggressively tried to stop Big Tech from expanding further, while the Justice Department’s antitrust division under Assistant Attorney General Jonathan Kanter has ramped up. action strength.
Both agencies have stressed the importance of updating enforcement to reflect a modern economy, even if it means losing more cases.
In the new guidelines, they outline 13 points for assessing whether a merger should be blocked:
1. The merger should not significantly increase the degree of concentration in a highly concentrated market.
2. The merger shall not eliminate substantial competition among the companies.
3. Mergers should not increase coordination risks.
4. Mergers should not eliminate potential entrants to a concentrated market.
5. Mergers should not substantially reduce competition by creating a company that controls products or services that its competitors may use to compete.
6. Vertical mergers should not create market structures that exclude competition.
7. Mergers should not consolidate or expand dominant positions.
8. Mergers should not further exacerbate centralization trends.
9. When the merger is part of a series of multiple acquisitions, the regulator can examine the entire series.
10. When mergers involve multilateral platforms, agencies should examine competition between, within or replacing platforms.
11. When a merger involves competing buyers, the agencies review whether the merger would substantially reduce competition for workers or other sellers.
12. Agencies review the impact on competition when acquisitions involve partial ownership or minority stakes.
13. Mergers should not substantially reduce competition or create monopolies.
this 2020 The guidelines do not explicitly discuss the impact on competition for workers.The new language also seems to address issues related to multilateral platforms, such as amazon Serving consumers and businesses.
The agencies are likely to broaden the types of deals they review, possibly considering a series of deals rather than a single merger. The FTC has already started down this road, suing Facebook parent company Meta in 2020, citing its repeated acquisitions of smaller competitors such as Instagram and WhatsApp as a strategy to maintain its supposed monopoly power.
A senior FTC official told reporters at a news conference on Tuesday that the guidance should provide judges with the clarity they have asked for in the past on merger law, a challenge for judges who rarely encounter antitrust cases especially important.
Federal Trade Commission explain It will work with the Justice Department to develop new guidelines in 2021 after voting to withdraw the latest version. The then-Democratic majority said the 2020 guidelines “adopted a particularly flawed economic theory that alleged mergers favored competing interests, although not backed by legal or market realities,” according to a report. Press release then.
In the nearly two years since those guidelines were repealed, agency workers have often faced questions about when a new set of rules would come out.
FTC officials and a senior Justice Department official said in telephone interviews with reporters that the guidance reflected their latest approach to enforcing merger laws, emphasizing that the law itself has not changed. They said the agencies evaluated more than 5,000 comments they received when launching the project.
The public has until September 18 to submit comments on the draft guidelines. The agencies will then review the comments and consider revisions before final publication.
Once finalized, the duration of the new guidance may depend on political power dynamics after the next presidential election in 2024. After all, the Federal Trade Commission (FTC) voted to withdraw the last version of the guidance more than a year after it was officially published.
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