In January 2022, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division announced a joint public inquiry focused on increasing enforcement actions against illegal mergers. The agencies believe that “many industries across the economy are becoming more concentrated and less competitive,” which ultimately impacts consumers, and the “problems are likely to persist or worsen due to an ongoing merger surge that has more than doubled merger filings from 2020 to 2021.”
Therefore, to address concerns, the DOJ and FTC are asking for public input on how they can modernize federal merger guidelines, focused on detecting illegal and anticompetitive deals. The agencies encourage a variety of stakeholders, including market participants, government entities, economists, attorneys, academics, unions, employees, farmers, workers, businesses, franchisees, and consumers, to share feedback, evidence, and ideas that may inform revisions to the guidelines.
Specifically, the FTC and DOJ are looking for information on whether the guidelines explain and implement the statutory ban on transactions that “may” substantially lessen competition or tend to create a monopoly, and what harms are contemplated by those standards.
The agencies also request information on whether market concentration thresholds should be adjusted to improve the efficiency and effectiveness of enforcement, whether alternative metrics or qualitative factors should also trigger presumptions of competitive harm, and evidence regarding the accuracy of such presumptions.
The DOJ and FTC are also looking for feedback on how they might address the issue of buyer power in greater detail in the guidelines as they believe labor markets are a key example of buyer power, and would like information and tips on how the guidelines could/should analyze the effects mergers have on labor markets.
Agency and Attorney Comments
“Illegal mergers can inflict a host of harms, from higher prices and lower wages to diminished opportunity, reduced innovation, and less resiliency,” said FTC Chair Lina M. Khan. “This inquiry launched by the FTC and DOJ is designed to ensure that our merger guidelines accurately reflect modern market realities and equip us to forcefully enforce the law against unlawful deals. Hearing from a broad set of market participants, especially those who have experienced first-hand the effects of mergers and acquisitions, will be critical to our efforts.”
“Our country depends on competition to drive progress, innovation, and prosperity,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “We need to understand why so many industries have too few competitors, and to think carefully about how to ensure our merger enforcement tools are fit for purpose in the modern economy.”
Jim Burns, an antitrust attorney with Dykema, said, “What this announcement categorically demonstrates is that interest in changing merger analysis is real. Change is coming. Mergers in healthcare, and in every industry, are going to be getting a much more careful and much more thorough review than they might have in the past.”
Comment Submission
If you are interested in submitting a comment, you can do so here. Submissions are due no later than Monday, March 21, 2022.