Last week the Department of Justice and Federal Trade Commission (Antitrust Agencies) jointly released a draft of their long-awaited revised Merger Guidelines, which reflect the Biden Administration’s ramped up merger enforcement priorities.¹ More than two years ago, the Antitrust Agencies promised to review their jointly issued Horizontal and Vertical Merger Guidelines in the wake of President Biden’s Executive Order on Promoting Competition in the American Economy.² Although the Antitrust Agencies have periodically updated their guidelines in the past,³ the latest iteration reflects considerably more than a step-change in merger policy.

Overall, the revised Merger Guidelines reflect the more robust merger review policies we have observed during the first years of the Biden Administration. The Administration has focused on complex platform markets, labor markets, and sectors it views as overly consolidated; pursued novel antitrust theories; and refused to accept structural or behavioral remedies and other mitigations. The revised Guidelines, which potentially herald a new era of aggressive anti-merger enforcement efforts, pursue a more robust policy, in part, by reference to older case law that courts have not tended to follow in recent years.

Whether courts will adopt these new “old” antitrust policies remains to be seen. Although the Merger Guidelines are not binding on federal courts, courts often cite them as persuasive authority. As recent cases demonstrate, however, federal courts have been willing to reject the Antitrust Agencies’ novel theories in cases where they have found insufficient supporting factual evidence – i.e., the lack of “smoking guns” – and have been willing to consider mitigations proposed by merging parties that the Antitrust Agencies rejected during the merger review process. In particular, courts have been unfriendly to the Antitrust Agencies’ approach to vertical mergers.

Notable changes to the proposed Merger Guidelines include:

• Presumption of Illegality: The Guidelines return to the pre-2010 guidance by stating that a merger is presumptively illegal if it would result in a Herfindahl-Hirschman Index of greater than 1,800 (at which point the market would be deemed “highly concentrated”) or a market share of more than 30 percent.
• Multi-Sided Platform Transactions: For the first time, the Guidelines specifically address how the agencies will examine deals that involve platforms that connect buyers and sellers and affect millions of consumers. For example, the Guidelines question whether platform owners should be able to acquire companies that sell on the platform, as it could create an incentive to favor the platform’s own products or services.
• Roll-Up Transactions: The Guidelines indicate that when companies or investors purchase a number of small, competing firms as part of a strategy to “roll-up” the acquired entities into a larger company, the Antitrust Agencies will review the cumulative effect of the whole series of purchases.

• Labor Market: Consistent with the Antitrust Agencies’ increased focus on the labor market, the Guidelines state that the Antitrust Agencies will examine whether a merger will substantially lessen competition for labor between employers.

• Vertical Mergers: The Guidelines indicate a renewed focus on vertical mergers, which have historically received less attention from the Antitrust Agencies. The Guidelines state that vertical mergers can “act as a clog on competition” by foreclosing competitors from a segment of the market otherwise open to them.

• Procompetitive Effects: In a departure from the 2010 Horizontal Merger Guidelines, the new draft Guidelines are skeptical that mergers have procompetitive benefits. The prior Guidelines reflected a belief that a “primary benefit of mergers to the economy is their potential to general significant efficiencies and thus enhance the merged firm’s ability and incentive to compete.” The new Guidelines emphasize two Supreme Court rulings from the 1960s holding that possible economies from a merger cannot be used as a defense to illegality.⁴

The Antitrust Agencies have established a 60-day public comment period, after which the draft Merger Guidelines will be finalized. Thus, interested parties should consider submitting their views for the Antitrust Agencies to consider as soon as possible.

Our antitrust team continues to monitor these developments and will keep you apprised as additional details become available.

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