FTC and DOJ Release Draft Merger Guidelines

The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have jointly released a draft update of the Merger Guidelines, a crucial document that outlines the agencies' approach to reviewing mergers and acquisitions for compliance with federal antitrust laws. The proposed update aims to reflect the realities of the modern economy and how firms conduct business, while also evaluating proposed mergers under the law. Both agencies are encouraging public feedback during a 60-day comment period, demonstrating their commitment to transparency and public engagement.

FTC Chair Lina M. Khan emphasizes that open, competitive, and resilient markets have been the foundation of America's economic success. To maintain this success, she stresses the importance of faithful and vigorous enforcement of antitrust laws. The new draft Merger Guidelines were informed by thousands of public comments from various stakeholders, including healthcare workers, farmers, patient advocates, musicians, and entrepreneurs, reflecting a broad spectrum of interests.

Guidelines Overview and Implications

The draft Merger Guidelines introduce thirteen key principles that the agencies may utilize when evaluating whether a merger is anticompetitive under antitrust laws. For compliance teams, this update has several implications:

1. Increased Focus on Concentration and Competition: The guidelines underscore that mergers should not significantly increase concentration in highly concentrated markets and must not eliminate substantial competition between firms.
2. Assessment of Vertical Mergers and Multi-sided Platforms: The agencies will examine the competition between platforms, on a platform, or to displace a platform when a merger involves a multi-sided platform.
3. Impact on Workers and Sellers: In cases involving competing buyers, the agencies will assess whether a merger may substantially lessen competition for workers or other sellers.
4. Evaluation of Minority Interests and Partial Ownership: The guidelines explicitly state that the agencies will examine the impact of acquisitions involving minority interests or partial ownership on competition.
5. Focus on Market Foreclosure and Monopolization: The guidelines highlight the importance of preventing vertical mergers from creating market structures that foreclose competition.

The FTC and DOJ stress that competition today differs significantly from the past, and the guidelines aim to adapt law enforcement tools accordingly. Compliance teams must recognize the ever-changing nature of markets and continuously update their risk assessments and strategies to align with evolving regulatory expectations.

The agencies invite public comments on the draft Merger Guidelines until September 18, 2023. This presents a valuable opportunity for compliance teams, businesses, trade associations, and practitioners to provide feedback and influence the final version of the guidelines.

The proposed update to the Merger Guidelines by the FTC and DOJ holds significant implications for compliance teams involved in mergers and acquisitions. By understanding and adhering to the principles outlined in the draft guidelines, compliance professionals can better navigate antitrust laws and ensure their organizations' mergers are conducted in compliance with federal regulations. The public comment period provides an essential avenue for stakeholders to contribute their insights and shape the final guidelines, fostering a more transparent and effective enforcement process.