In a June 18, 2020, letter to the heads of the Antitrust Division of the Department of Justice and the Federal Trade Commission, several U.S. Senators expressed their views that the draft vertical merger guidelines (“Guidelines”) (first released for public opinion on January 10, 2020) need to be strengthened and completed as expeditiously as possible. In the letter, these Senators noted the following:

Going forward, the economic chaos caused by the pandemic may lead to profound structural changes in many industries and a sharp rebound in mergers and acquisitions activity, as cash-rich companies and investors seek to acquire struggling businesses and assets at bargain prices. Many of these transactions will be vertical mergers, and inevitably, some will raise significant antitrust issues.

These Senators advocate for more rigorous antitrust enforcement of vertical mergers supported by Guidelines that, among other things:

• describe new “potential theories” of competitive harm;
• eliminate the safe harbor for transactions at or below 20 percent market share;
• address innovation effects in the context of vertical mergers;
• make clear that the burden of establishing efficiency defenses, including the elimination of double marginalization, rests with the merging parties;
• explicitly state that vertical mergers are not presumed to be inherently procompetitive; and
• include a discussion of vertical merger remedies.

While vertical mergers have garnered more attention, revising the draft Guidelines as these Senators advocate would represent a significant shift in vertical merger enforcement and signal a more narrow view of the many benefits of vertical mergers.

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