New Merger Guidelines Issued by Federal Trade Commission and Justice Department: What You Need to Know

Federal Trade Commission and Justice Department Issue New Merger Guidelines

Late last year, the Federal Trade Commission and the Justice Department jointly issued the long-awaited new Merger Guidelines, replacing the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines. These Guidelines provide a roadmap for how the Agencies may view a particular merger or acquisition and signal that the more stringent review of mergers and acquisitions under the Biden administration’s enhanced enforcement policies will continue.

The Guidelines consist of eleven analytical frameworks and factors used to identify mergers that may create a monopoly or decrease competition. They describe evidence that may be used to rebut such findings and are divided into three parts. The first six Guidelines describe characteristics of mergers that may harm competition, while the latter five explain how the Agencies apply the Guidelines to specific scenarios. Additionally, there is commentary outlining rebuttal evidence that may be used to counteract these presumptions.

The first six Guidelines set out presumptions of illegality in certain situations, such as when a merger significantly increases concentration in a highly concentrated market or eliminates substantial competition between firms. The Guidelines also address the risk of coordination, the elimination of potential entrants, limiting access to products or services, and entrenching or extending a dominant position.

The remaining five Guidelines explain how the Agencies will analyze specific concerns, including trends toward consolidation in an industry, multiple acquisitions in a series, mergers involving multi-sided platforms, competing buyers, and acquisitions involving partial ownership or minority interests.

Mergers are not necessarily doomed if they can establish credible rebuttal evidence. The Guidelines allow for the demonstration of no substantial lessening of competition threatened by the merger. Factors pertinent to rebuttal depend on the nature of the threat to competition or tendency to create a monopoly resulting from the merger.

Overall, the Guidelines highlight the Agencies’ focus on excessive market consolidation and their ramped-up approach to antitrust enforcement. While the Guidelines forecast a challenging antitrust climate, merging parties should remember that the presumptions are rebuttable. Parties are advised to engage in early planning and careful analysis to understand and reduce potential antitrust risks.

The impact of the Guidelines on the healthcare industry is also discussed in an article, which makes predictions for their significance for healthcare firms. The Guidelines indicate that deals may face more hurdles to close, but parties should consult antitrust counsel early in the process to navigate the regulatory and enforcement environment effectively.