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FTC Votes 3-2 To Rescind Vertical Merger Guidelines

 |  September 15, 2021

As expected, the Federal Trade Commission (FTC) has voted to “withdraw” its “flawed” vertical merger guidelines, which were issued jointly by the FTC and Justice Department (DOJ) under the Trump Administration, reported Yahoo News.

Vertical mergers are ones that combine different parts of the same supply chain, which the DOJ under Trump tried unsuccessfully to block.

In a 3-2 vote, the FTC’s Democratic commissioners, led by Biden-appointed Chairwoman Lina Khan, said the vertical merger guidelines adopted in 2020 had problems and weren’t tough enough.

This action could affect major ongoing vertical mergers such as Amazon’s bid for MGM Studios and biotechnology giant Illumina’s acquisition of cancer startup Grail.

The two agencies in charge of policing companies for anti-competitive conduct, the FTC and the Justice Department, will work on creating a stronger version of the vertical merger guidelines, Khan said during an FTC open meeting on Wednesday, September 15.

The Justice Department, in a separate statement, said Wednesday that it would work on writing new guidelines with the FTC but would continue to use Trump-era guidelines for the time being.

The two Republican commissioners at the agency criticized the decision to revoke the previous guidelines without replacing them and suggested the Trump-era guidelines were fair.

Republican Commissioner Christine Wilson said the old guidelines reflected “accepted economic analysis” and “do not shield vertical deals from antitrust enforcement,” highlighting that in some instances vertical mergers can have pro-competitive benefits and therefore are not illegal.

Democratic Commissioner Rebecca Kelly Slaughter also expressed hesitation to withdraw the guidelines without a replacement because before last year they had not been updated since 1984. Nevertheless, she voted in favor of revoking the guidelines.

Democrats say the old vertical merger guidelines were misleading companies trying to merge and leading to unfair and anti-competitive acquisitions.

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