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The New Merger Guideline Commandments: Thirteen Is An Unlucky Number

 |  July 21, 2023

By: Alden Abbott (Truth On The Market)

Introduction: On July 19, the Department of Justice (DOJ) and Federal Trade Commission (FTC) jointly released the new draft Merger Guidelines (DMG) for public review, allowing a two-month window for comments. The DMG comprises a collection of thirteen individual Guidelines, which acknowledge that they do not encompass all possible scenarios where a merger could lead to reduced competition or create a monopoly (Guideline 13). Interestingly, the decision to establish thirteen Guidelines raises concerns as it indicates significant flaws throughout the DMG, undermining their efficacy.

A concise overview: The DMG appear to be more of an anti-merger proclamation than a well-balanced framework. They neglect established economic principles, disregarding the benefits of vertical integration and the limitations of relying solely on economic concentration figures. Furthermore, the DMG overlook modern antitrust case law, which prioritizes consumer welfare – a topic that the DMG barely acknowledge. Instead, the DMG present a multitude of theoretical scenarios depicting potential competitive harm as a basis for enforcement actions, while disregarding any recognition of the potential procompetitive and welfare-enhancing aspects of the discussed conduct. Essentially, the DMG create a “pick and choose” checklist of various possible competitive risks attributed to mergers, which collectively discourage exploring economically advantageous acquisitions. Although they briefly touch upon efficiencies towards the end of the document (see Part IV, Rebuttal Evidence), it becomes apparent that the DMG render efficiency defenses virtually ineffective.

Granted, the DMG do contain references to previous guidance on market definition and rebuttal evidence (Parts III and IV) and include four appendices covering evidence, competition evaluation between firms, market definition details, and market share calculations. However, the overall tone of the DMG suggests that decisions on merger challenges will heavily rely on the thirteen individual guidelines outlined in Part II (Applying the Merger Guidelines). (Part I of the DMG, Overview, briefly enumerates the thirteen specific guidelines from Part II and provides further details on the latter sections of the document…)