On August 19, 2010, the Department of Justice and Federal Trade Commission (the “agencies”) released the final revised Horizontal Merger Guidelines (“Guidelines”). The Guidelines, last significantly revised in 1992, set forth the methods the agencies use to assess which mergers between rivals are anticompetitive and thus potentially subject to antitrust challenge.
The agencies set out to revise the Guidelines because, the agencies indicated, the 1992 Guidelines did not accurately reflect how the agencies actually analyze mergers. Although the revised Guidelines leave the central framework for analyzing mergers intact – the agencies will identify relevant markets, assign market shares, determine increases in concentration, and assess entry and competitive effects – the revisions reflect a number of important changes that bring the Guidelines more into line with the process and analysis parties presenting transactions to the agencies will confront.
The analytical approaches embraced by the revised Guidelines suggest that the agencies can be expected to closely scrutinize mergers between producers of differentiated products (industries where quality and brands play an important role), to remain skeptical of entry arguments, and to carefully consider theories of “nonprice” anticompetitive effects, including how transactions may retard innovation. As the federal courts have yet to embrace many of the principles the revised Guidelines advance, merging parties in the future may more often face the choice between abandoning transactions that face agency opposition or completing a burdensome merger-review process in the hopes of ultimately convincing the agencies – and if not the agencies the federal courts – that a transaction is competitively benign.
No single analytic framework. The 1992 Guidelines described the “analytical framework and specific standards normally used by the [agencies] in analyzing mergers.” The revised Guidelines, by contrast, outline “the principal analytical techniques and the main types of evidence on which the Agencies usually rely to predict whether a horizontal merger may substantially lessen competition” and specifically state that the “Guidelines should be read with awareness that merger analysis does not consist of the uniform application of a single methodology.”
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