In recent years, the Federal Trade Commission (FTC) has launched significant investigations into mergers between distributors, with the merging parties resolving the FTC’s concerns through consent, by abandoning the transaction entirely, or litigating the FTC’s requests for injunction through judgment. This precedent provides valuable insight into how the FTC analyzes such mergers.
Distribution mergers raise important and oftentimes complex competition concerns that require careful analysis of market structure and the likely competitive effects for particular classes of customers. Different distribution channels can sell precisely the same product but not actually compete against each other, because the idiosyncratic characteristics of one channel disqualify it as an option for a particular group of customers. This article synthesizes key factors considered by the FTC in distribution mergers spanning the past two decades, including the FTC’s more recent focus on acquisitions of disruptive distributors. These factors are essential for counsel to assess and proactively address to avoid a costly FTC challenge and likely death knell to a proposed distribution merger.
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