The Justice Department and Federal Trade Commission are proposing tightening their merger review guidelines, citing what Attorney General Merrick Garland calls “unchecked consolidation” that “threatens the free and fair markets upon which our economy is based.”
Garland said the guidelines reflect modern market realities. One of those is the rise of the biggest of big tech, Facebook in particular. The Justice Department and FTC — under both Republican and Democratic administrations — as well as Congress have looked at Facebook with concern over efforts to buy up potential competitors before they get big enough to trigger serious merger reviews. For example, one of the new guidelines says that mergers “should not eliminate a potential entrant in a concentrated market.”
Garland said the guidelines reflect modern market realities. One of those is the rise of the biggest of Big Tech — Facebook in particular, which Justice and the FTC have targeted in both Republican and Democratic administrations — and Congress have been looking at with a concern over efforts to buy up potential competitors before they get big enough to trigger serious merger reviews. For example, one of the new guidelines says that mergers "should not eliminate a potential entrant in a concentrated market."
The FTC under chair Lina Khan had signaled it would be looking hard at big tech companies and whether they got that big via buying up to monopoly. The guidelines would put that in writing as policy going forward.
Justice and FTC divvy up merger reviews for antitrust issues, with Justice generally taking the lead on communications mergers. The Federal Communications Commission merger-review process also includes competition issues, but extends to a review of whether a merger is otherwise in the public interest.
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The guidelines were last updated in 2020 during the Trump administration, but Democrats argued they kept a thumb on the scale for mergers, including by, for one, failing to identify merger characteristics that are most likely to be problematic. That is clearly not the case with the draft guidlines just proposed under the Biden Administration.
The new guidelines are in draft form, so they’ll still need to be finalized, but they will come after public comment on how the guidelines should be revised that included feedback from over 5,000 parties, the DOJ said.
The new guidelines are:
- “Mergers should not significantly increase concentration in highly concentrated markets;
- “Mergers should not eliminate substantial competition between firms;
- “Mergers should not increase the risk of coordination;
- “Mergers should not eliminate a potential entrant in a concentrated market;
- “Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete;
- “Vertical mergers should not create market structures that foreclose competition;
- “Mergers should not entrench or extend a dominant position;
- “Mergers should not further a trend toward concentration;
- “When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series;
- “When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform;
- “When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers;
- “When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition“ and “mergers should not otherwise substantially lessen competition or tend to create a monopoly.”
Those 5,000 parties, and anyone else who wants to weigh in, will now have an additional 60 days to comment on the draft guidelines, with a deadline of September 18.
