DOJ, FTC Summit May Shed Light on Merger Guidelines Reform

The Department of Justice (DOJ) announced on Thursday (March 10) that its Antitrust Division and the Federal Trade Commission (FTC) will cohost a conference on April 4. Assistant Attorney General Jonathan Kanter and FTC Chair Lina M. Khan, as well as senior staff from both agencies, will guide discussions about modernizing merger guidelines as well as interagency collaboration. 

This event comes just a few months after the FTC rescinded its Vertical Merger Guidelines in September, which were issued jointly with the DOJ to provide transparency about the agencies’ approach to vertical merger analysis. This was a controversial decision within the FTC and highly criticized in the business community. FTC Commissioner Christine Wilson voted against rescinding the vertical merger guidelines, saying, “once again, we are withdrawing a sound policy based on economic analysis, agency experience and substantial public input unilaterally with little notice to the public and with no opportunity for public input.”

The business community and even many of the most eminent antitrust scholars shared her concerns. However, the move was consistent with President Joe Biden’s intention to revise merger control more generally. In fact, Biden issued an executive order in 2021 which, among other things, mandated the FTC to study the effectiveness of the guidelines at the time.

The DOJ also issued an statement noting that it is “conducting a careful review of… the Vertical Merger Guidelines to ensure they are appropriately skeptical of harmful mergers … The department’s review has already identified several aspects of the guidelines that deserve close scrutiny, and we will work closely with the FTC to update them as appropriate.”     

The vertical merger guidelines were not the only measure affected by this regulatory overhaul.

In January, the FTC and DOJ launched a joint public inquiry to review the horizontal merger guidelines to strengthen enforcement and clamp down on big mergers, especially in digital markets. The ongoing review will focus on how to assess mergers that include free services, where traditional antitrust analysis may not bring accurate results. 

The agencies are also seeking input to update the market definition analysis to better account for non-price competition. Just this week, the agencies reported that they intend to have new horizontal merger guidelines ready by the end of the year. 

Read more: FTC, DOJ Launch Consultation To Tighten Grip on Big Tech M&A 

In the April summit, the DOJ and FTC will invite participants to discuss both, vertical and horizontal mergers. The summit will focus on how the merger guidelines should be revised to account for today’s market realities, as well as effective analytical tools to determine this. Many of the questions raised seem to suggest that current economic thinking does not provide sufficient guidance to assess mergers and acquisitions.  

One of the panels planned for the event suggests that more than one merger guideline could be adopted. According to the public information on the event, digital markets may have specific dynamics that may not apply to other sectors. There has also been renewed interest in how serial acquisitions or data aggregation may increase monopoly power. In essence, mergers and acquisitions by Big Tech companies will continue to be in enforcers’ agendas. 

But this is not the only topic that may be controversial.

The DOJ and FTC plan to discuss whether enforcers need to describe ways in which the merged firm is likely to exercise market power post-merger (e.g., through foreclosure or predation), or if it is sufficient to establish that the firm has the incentive and ability to do so. This is a way to reduce the burden of proof for the regulators if they would seek to block a merger. Law firms are likely to oppose such a move.

Nevertheless, even if the DOJ or FTC try to block a merger based only on these circumstances, it may be moot as they would still have to prove that a deal is anticompetitive before a judge. 

The summit will be a good opportunity to learn what the DOJ’s and FTC’s main concerns are and possible changes to merger guidelines.