On July 19, 2023, the FTC and DOJ published draft merger guidelines.
Historically, the purpose of these guidelines has been to provide the public, including companies whose transactions are potentially subject to agency review, with information about how the agencies analyze mergers to identify potential competitive harm. The guidelines have no force of law and are not binding on the courts, though courts have relied on them as persuasive authority to varying degrees. Past iterations of the guidelines have therefore provided a neutral explanation of the agencies’ approach, including descriptions of the economic tools that they and the courts can use to assess a merger’s likely competitive effects.
In contrast to prior versions, the proposed draft guidelines offer a one-sided view of mergers’ likely competitive effects, and cite extensively but selectively to antitrust precedent in an effort to support that view. Over half of the cases that the draft guidelines cite are from the 1970s or earlier, and those cases are cited four times more often than cases from this century. The proposal does not cite any of the recent agency losses. In this respect, much of the document is more like a legal brief. The courts may give these guidelines little or no weight as they do not defer to the agencies’ interpretation of law, and the proposal ignores current cases and analytic tools to instead focus on precedent that is widely considered outdated.
The proposal also departs substantially from the substantive approaches to merger analysis reflected in prior guidelines. Broadly, the draft guidelines reflect the current agency leadership’s avowed hostility toward mergers, and an effort to correct for what they seem to view as overly-permissive precedent. Below, we summarize the key differences between prior guidelines and the draft proposal.
Please click here to read the full alert memorandum.