By: Jay Ezreliev (Truth On The Market)
One of the key changes in the draft merger guidelines of the Federal Trade Commission (FTC) and the U.S. Justice Department (DOJ) is the shift away from market power as the primary focus of merger enforcement. In the 2010 horizontal merger guidelines, the central idea was that mergers should not be allowed to create, strengthen, or perpetuate market power or make it easier to exploit. However, the draft guidelines no longer include this overarching principle.
The abandonment of market power enhancement as the primary focus in merger enforcement will have significant implications for antitrust regulation. Firstly, it means that the enforcement of mergers will no longer prioritize the interests of consumers over those of the merging companies’ competitors. Secondly, it results in the removal of a crucial criterion in merger enforcement. Courts have previously recognized that proving an increase in market power is essential in a merger challenge under antitrust law. For instance, the U.S. Circuit Court of Appeals for the D.C. Circuit emphasized this in its 2001 FTC v. H.J. Heinz decision, stating that “merger enforcement, like other areas of antitrust, is aimed at addressing market power.” The draft guidelines, however, no longer require demonstrating an increase in market power as a fundamental element in a merger case.
The absence of this critical criterion in merger enforcement could potentially grant the FTC and the DOJ’s Antitrust Division more freedom to scrutinize all mergers, possibly pursuing objectives that extend beyond antitrust concerns. This could lead to political enforcement that serves the interests of the administration in power, a development that could raise concerns within the antitrust field…