According to a U.S. Department of Justice (DOJ) press release, the DOJ and the Federal Trade Commission (FTC) have released a draft update of the Merger Guidelines (the “Draft Guidelines”), which describe and guide the agencies’ review of mergers and acquisitions to determine compliance with federal antitrust laws. As stated in the press release, “[t]he Draft Guidelines build upon, expand, and clarify frameworks set out in previous versions”; they “give an overview of 13 principles, or ‘guidelines,’ that the agencies may use when determining whether a merger is unlawfully anticompetitive under the antitrust laws”; and they “are not mutually exclusive, and a given merger may implicate multiple guidelines.”

The 13 Draft Guidelines are:

1. Mergers should not significantly increase concentration in highly concentrated markets;
2. Mergers should not eliminate substantial competition between firms;
3. Mergers should not increase the risk of coordination;
4. Mergers should not eliminate a potential entrant in a concentrated market;
5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete;
6. Vertical mergers should not create market structures that foreclose competition;
7. Mergers should not entrench or extend a dominant position;
8. Mergers should not further a trend toward concentration;
9. When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series;
10. When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform;
11. When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers;
12. When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition; and
13. Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

The public comment period for the Draft Guidelines ends on September 18, 2023. As mentioned in the DOJ press release, the agencies will use the public comments to evaluate and update the draft before finalizing the Draft Guidelines.

According to the FTC, antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power. Section 2 of the Sherman Act makes it unlawful for any person to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations … ” As explained by the FTC, “[a]s a first step, courts ask if the firm has ‘monopoly power’ in any market. This requires in-depth study of the products sold by the leading firm, and any alternative products consumers may turn to if the firm attempted to raise prices. Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. Here courts evaluate the anticompetitive effects of the conduct and its procompetitive justifications.”

Last Updated on July 30, 2023 by Ramin Seddiq