As we previously wrote about, in January 2022, the Federal Trade Commission (“FTC”) and the U.S. Department of Justice (the “DOJ” and, together with the FTC, the “Agencies”) launched a joint public inquiry designed to strengthen and modernize antitrust enforcement in the United States, seeking public input to inform their anticipated revisions to the merger guidelines, among other things.

On July 19, 2023, the Agencies released draft revised merger guidelines (the “Draft Merger Guidelines”) that would provide an updated framework for analyzing mergers and acquisitions under federal antitrust laws, including streamlining guidance on horizontal and vertical (and multidimensional) mergers into one set of guidelines. The public comment period ended on September 18, 2023. The Agencies will now review feedback and finalize the guidelines.

When announcing the Draft Merger Guidelines, the Agencies noted that they are intended to modernize merger review and update the prior guidance to reflect current economic realities. Among other changes, the Draft Merger Guidelines: (i) include a heightened focus on the impact of concentration on labor markets, including the negative impact that consolidation may have on benefits, wages and working conditions; (ii) address the Agencies’ proposed approach to reviewing acquisitions involving multi-sided platforms, which is unsurprising given the federal government’s recent antitrust focus on social media networks and other platforms like Amazon; (iii) encourage the evaluation of serial acquisitions, enhancing scrutiny on private equity firms that frequently employ roll-up strategies for growth; (iv) lower the threshold for the structural presumption of market concentration; and (v) set forth a rebuttable structural presumption of competitive harm as relates to vertical mergers, an area of increased focus for the Agencies.

In furtherance of the Agencies’ aims to modernize merger review and reflect current economic realities, the Draft Merger Guidelines set forth thirteen guidelines that the Agencies can use when analyzing whether a merger is anticompetitive in violation of the antitrust laws, as well as the tools and frameworks that can be used to define relevant markets and evaluate mergers under each guideline. A merger may implicate multiple guidelines, and the Agencies retain wide discretion to look beyond these guidelines at other factors. These thirteen guidelines, which are meant to be reflective of the most common issues arising in today’s merger enforcement environment, are as follows:

1. Mergers should not significantly increase concentration in highly concentrated markets.
2. Mergers should not eliminate substantial competition between firms.
3. Mergers should not increase the risk of coordination.
4. Mergers should not eliminate a potential entrant in a concentrated market.
5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.
6. Vertical mergers should not create market structures that foreclose competition.
7. Mergers should not entrench or extend a dominant position.
8. Mergers should not further a trend toward concentration.
9. When a merger is part of a series of multiple acquisitions, the Agencies may examine the whole series.
10. When a merger involves a multi-sided platform, the Agencies examine competition between platforms, on a platform, or to displace a platform.
11. When a merger involves competing buyers, the Agencies examine whether it may substantially lessen competition for workers or other sellers.
12. When an acquisition involves partial ownership or minority interests, the Agencies examine its impact on competition.
13. Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

Overall, the Draft Merger Guidelines provide specific and detailed guidance that should be helpful to merging parties, even if the Agencies’ approach to investigating a wide range of mergers is unwelcome. The Draft Merger Guidelines are also consistent with prior pronouncements of the Biden Administration and the Agencies related to antitrust enforcement for the modern economy and align with their emphasis on the potentially adverse labor effects of concentration, the anticompetitive facets of multi-sided platforms, concerns regarding vertical integration, and the multidimensional aspects of today’s markets. In aligning with these recent pronouncements, the Draft Merger Guidelines confirm a fundamental departure from the Agencies’ prior approach to antitrust enforcement. However, it remains to be seen what form the final merger guidelines will take, whether courts will find them persuasive and adopt them in their decision-making (especially given the proposed guidelines diverge in significant respects from the guidance that courts use today), and how the revised merger guidelines will impact the Agencies’ current aggressive (albeit with mixed success) litigation antitrust enforcement strategy.

The release of the Draft Merger Guidelines shortly followed the FTC’s announcement of a proposal for significant changes to the premerger notification filing process under the Hart-Scott-Rodino Act, as discussed in our separate publication.

For additional information, please contact one of the authors listed or any member of our Mergers & Acquisitions Practice Group.