By: Jon B. Dubrow, Raymond A. Jacobsen, Jr., Ryan Tisch & Joel R. Grosberg (Antitrust Alert)
On December 18, 2023, the US Federal Trade Commission (FTC) and the US Department of Justice Antitrust Division (DOJ) released their updated Merger Guidelines. These revised guidelines mark a notable shift toward a more enforcement-centric approach compared to their predecessors, closely aligning with the draft guidelines unveiled in July 2023. It is imperative for companies to comprehend the Merger Guidelines and their ramifications as they develop strategies for evaluating potential mergers and acquisitions.
It’s essential to note that while the guidelines offer valuable insights, they do not constitute legal statutes. The Agencies (FTC and DOJ) have encountered setbacks, experiencing losses or agreeing to settlements permitting transactions to proceed, especially when pursuing some of the more assertive theories outlined in these new Merger Guidelines. Despite the challenges posed by the guidelines’ heightened enforcement orientation, numerous opportunities and strategies persist for achieving successful regulatory clearance.
The previous Merger Guidelines centered on the principle that mergers should not lead to increased prices or reduced output, quality, or innovation. The document’s various analyses contributed to evaluating this fundamental concern.
In contrast, the 2023 Merger Guidelines depart from this overarching theme and introduce an extensive array of potential enforcement theories. This includes some carried over from the previous guidelines, such as recognizing that mergers between close competitors or those significantly escalating concentration can pose challenges.
Furthermore, the updated Merger Guidelines incorporate novel concepts not covered in the prior version. These include broader theories related to potential market entry, mergers solidifying a dominant position, and the impact of mergers on labor markets. The cumulative effect of these new guidelines underscores a clear trend that has been apparent to industry practitioners in recent years: parties and legal representatives must be ready to defend a transaction based on a spectrum of horizontal, vertical, and potential competition theories. Additionally, given that the Agencies’ theories extend beyond existing case law, legal counsel should be well-prepared and have adequate time to navigate merger challenges through litigation, as has been a common approach recently for companies seeking approval of their transactions, as detailed below…