The FTC and DOJ yesterday released draft Merger Guidelines that would replace all prior agency guidance as it relates to vertical, horizontal and potential competition mergers.1 The Draft Guidelines represent a departure from the bi-partisan consensus approach to mergers that had prevailed before the Biden administration, but are fully consistent with the philosophy of the agencies’ current leadership, as reflected in their speeches, testimony and actions taken over the last two years.
The Draft Guidelines are organized around 13 core principles (themselves labeled “Guidelines”) summarizing the ways in which the agencies believe mergers may harm competition. Neither the timing nor substance of the Draft Guidelines is particularly surprising. The Draft Guidelines largely re-articulate the agencies’ public aggressive agenda to challenge and deter a wide range of mergers. Purportedly rooted in “binding precedent,” the Draft Guidelines rely heavily on decades-old case law, which often diverges from more recent cases, and omit altogether authority for certain key provisions. This is particularly evident in the treatment of potential competition and vertical mergers, where the Draft Guidelines set out positions that were taken—and explicitly rejected—by the federal courts in the challenges to Meta Platforms, Inc.’s acquisition of Within Unlimited, Inc. and Microsoft’s proposed acquisition of Activision, respectively.2
The Draft Guidelines are the product of an initiative first announced in January 2022 to re-examine the agencies’ approach to merger analysis.3 Since then, the FTC and DOJ have solicited public comments and conducted four “listening sessions.” Upon release of the Draft Guidelines, the agencies opened a 60-day public comment period that is set to expire on September 18, 2023 although that period may be extended.
We do not expect the agencies to meaningfully alter or pare-back the Draft Guidelines before they are made final. As a result, the Draft Guidelines (or something close to them) will likely be finalized and remain in place at least until the next change of administration.
This alert summarizes the most significant substantive changes to existing guidelines as well as the likely impact of the guidelines on the agencies’ merger review and litigation.