August 20, 2010
On August 19, 2010, the United States Department of Justice and Federal Trade Commission issued their new Horizontal Merger Guidelines, which were issued in draft last April for public comment.
In issuing their new Merger Guidelines, the DOJ said:
“The revised merger guidelines derive from the agencies’ collective experience in assessing thousands of transactions focusing on the types of evidence the department and the FTC use to decide whether a merger of competitors may harm competition. Many of the proposed refinements and changes reflect issues previously identified in the “Commentary on the Horizontal Merger Guidelines,” which the agencies jointly issued in 2006. In crafting the revisions, the agencies considered a wide range of opinions gathered through a series of joint public workshops, as well as hundreds of public comments submitted by attorneys, academics, economists, consumer groups and businesses.
‘The revised guidelines better reflect the agencies’ actual practices,’ said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. ‘The guidelines provide more clarity and transparency, and will provide businesses with an even greater understanding of how we review transactions. This has been a successful process due to the commitment of the talented staff from both agencies and the excellent working relationship with the FTC led by Jon Leibowitz.’”
According to the U.S. DOJ, the new Merger Guidelines differ from the previous 1992 Guidelines in a number of respects, in that they:
1. Clarify that merger analysis does not use a single methodology, but is a fact-specific process through which the agencies use a variety of tools to analyze the evidence to determine whether a merger may substantially lessen competition.
2. Introduce a new section on “Evidence of Adverse Competitive Effects.” This section discusses several categories and sources of evidence that the agencies, in their experience, have found informative in predicting the likely competitive effects of mergers.
3. Explain that market definition is not an end itself or a necessary starting point of merger analysis, and market concentration is a tool that is useful to the extent it illuminates the merger’s likely competitive effects.
4. Provide an updated explanation of the hypothetical monopolist test used to define relevant antitrust markets and how the agencies implement that test in practice.
5. Update the concentration thresholds that determine whether a transaction warrants further scrutiny by the agencies.
6. Provide an expanded discussion of how the agencies evaluate unilateral competitive effects, including effects on innovation.
7. Provide an updated section on coordinated effects. The guidelines clarify that coordinated effects, like unilateral effects, include conduct not otherwise condemned by the antitrust laws.
8. Provide a simplified discussion of how the agencies evaluate whether entry into the relevant market is so easy that a merger is not likely to enhance market power.
9. Add new sections on powerful buyers, mergers between competing buyers, and partial acquisitions.
For a copy of the new DOJ/FTC Merger Guidelines see: Horizontal Merger Guidelines. For a copy of the DOJ’s news release see: Department of Justice and Federal Trade Commission Issue Revised Horizontal Merger Guidelines. For the written comments on the draft Merger Guidelines see: Comments on Proposed Horizontal Merger Guidelines.
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