DOJ and FTC Launch Process to Revise Merger Guidelines

The DOJ and FTC announced on Tuesday that they are jointly reviewing the most recent versions of both the Horizontal and Vertical Merger Guidelines, and invited public comments on a wide range of issues detailed in a lengthy Request For Information. The RFI itself and the announcement of the review signal that the agencies are aligned in making significant changes to the merger guidelines, both to expand the scope of issues covered by the guidelines and to reflect an approach rooted in older case law that would support much more stringent merger scrutiny and enforcement.

FTC Chair Lina Khan and DOJ Assistant Attorney General Jonathan Kanter jointly announced that they are beginning a process promulgate a new set of merger guidelines that “modernizes” the agencies’ current enforcement framework for evaluating all mergers, including vertical and horizontal transactions. The agency heads specified that they are particularly interested in receiving comments relating to excessive consolidation, labor markets, vertical and other non-horizontal combinations, presumptions that certain transactions are unlawful, the approach to transactions involving private equity firms, the acquisitions of nascent and potential competitors, and a host of other issues.

For example, Chair Khan explained that the FTC plans to increase its focus on the impact of transactions on labor markets, and seeks comments regarding whether cost-savings resulting from layoffs should be considered cognizable efficiencies. The FTC and DOJ also have requested comments regarding whether new guidelines should contain a sharper focus on digital markets and other industries that have been transformed by new technologies over the past decade.

The announcement indicates that the agencies may seek to return to antitrust principles articulated in case law dating back prior to the 1970s, as discussed by Sandeep Vaheesan in Crowell & Moring’s recent Antitrust & Tech Conference, co-hosted by The George Washington University Competition Law Center. If new guidelines were to rely on these principles, they could usher in a sweeping change in merger enforcement, with more restrictive structural presumptions, a broader focus on potential competition, and a greater emphasis on non-price anticompetitive effects (e.g., quality and innovation). They might also lead to less consideration of proffered procompetitive justifications and efficiencies. New guidelines may seek to identify not just mergers where the effect "may be substantially to lessen competition, or to tend to create a monopoly,” the Clayton Act language that is the agency’s current focus, but expand the approach to challenge mergers that may contribute to a “trend toward concentration” in an industry, which was more common in the 1960s.

Notably, Chair Khan and AAG Kanter appeared to be in sync on the priorities for the proposed revised merger guidelines. For example, AAG Kanter said that, while the DOJ had not formally repealed the 2020 Vertical Merger Guidelines unlike the FTC, the DOJ shares the FTC’s concerns that the 2020 Vertical Merger Guidelines take an overly permissive view of vertical integration.

While agency guidelines do not carry the force of law, the merger guidelines have been frequently cited and used by federal courts ruling on merger challenges. Past agency leaders have worked hard to ensure that any revisions to those guidelines both reflect current agency enforcement policy and are broadly consistent with existing legal precedent – and therefore remain persuasive to the courts that apply them. Given the extensive list of potential revisions that appear to be under consideration, a key question will be whether the current agency leadership will attempt to find such consistency through this revision. 

The risk for the agencies, of course, is that drastic changes to the merger guidelines, which are likely to draw significant criticism from the business community, will not be as persuasive to courts in future merger litigation. FTC Commissioners Noah Phillips and Christine Wilson released a statement “welcome[ing]” the process, but cautioned that some of the questions in the RFI “appear to be premised on debatable assumptions,” and noted that “much of the legal authority cited in the RFI is nearly or more than half a century old.”

The FTC and DOJ are currently seeking public comments on topics listed in the RFI, as well as other relevant issues. After reviewing comments, they will draft new guidelines and publish those for public comment as well. Both Chair Khan and AAG Kanter emphasized that they are looking to hear from a broad range of market participants, including consumers, workers, entrepreneurs, startups, independent businesses, small businesses, farmers, entrepreneurs, and innovators.

Crowell & Moring’s Antitrust & Competition practice is closely following these developments and advising clients as to potential options for responding to the RFI. Comments are due March 21. We will continue to post updates on possible revisions to the Merger Guidelines as the process plays out.

For further reading, linked here are Chair Khan’s comments, AAG Kanter’s comments, the statement of Commissioners Phillips and Wilson, and the RFI.