A PYMNTS Company

Aerospace and Defense Series: DOJ and FTC Vertical Merger Guidelines Will Impact Government Contractors

 |  February 26, 2020

Jon B. Dubrow & Anthony S. Ferrara; Antitrust Alert

Last month, the Department of Justice Antitrust
Division (DOJ) and Federal Trade Commission (FTC) released updated Vertical Merger Guidelines in
draft form
. These guidelines provide a useful resource for aerospace
and defense contractors involved in M&A transactions. Vertical competition
issues frequently arise in this industry given the nature of the supply base
and contracting and supply relationships between companies operating at
different levels of the supply chain.

This is the first time the antitrust agencies have released updated guidelines for analyzing vertical mergers since 1984. Although the agencies have updated the Horizontal Merger Guidelines several times since then (most recently in 2010), they have not provided similar updated guidance to businesses regarding vertical merger enforcement until now. The new guidelines summarize the practices, standards, and theories the agencies have used in evaluating vertical mergers for a number of years.

Although the guidelines do not signal any shifts in current agency practice, they do provide the business community greater transparency about how the agencies analyze vertical mergers. This is helpful for the aerospace and defense industry, which is particularly susceptible to vertical competition issues given the heavy reliance on contracting out important elements at different levels of the supply chain…

Continue Reading…