CRS Reviews Proposed Changes under DOJ and FTC Draft Merger Guidelines

The Congressional Research Service ("CRS") reviewed draft Merger Guidelines proposed by the DOJ and FTC, early responses to the proposed draft and policy considerations for Congress.

In a "Legal Sidebar," CRS stated that the DOJ and FTC proposed the draft guidelines to accurately reflect (i) "modern market realities" and (ii) the Clayton Act (which prohibits mergers or acquisitions that may substantially lessen competition) and precedent interpreting the statute. CRS stated that the draft guidelines are significant because they clarify when agencies may challenge a particular merger, which "may then influence decisions by firms whether to forego, alter, or abandon deals." CRS highlighted the key changes from the current guidelines, including:

• providing a single set of principles to apply to all mergers rather than distinguishing between horizontal and vertical mergers;
• instructing agencies to assess acquisitions involving multi-sided platforms (i.e., platforms that offer different products or services to two or more different groups) by evaluating the impact on competition both between platforms and on a platform;
• focusing on competition in labor markets; and
• lowering the threshold for when a merger is "presumed" to substantially lessen competition

CRS reported that commentators who support the changes (i.e., FTC Commissioners, the White House, the DOJ Assistant Attorney general) say that the revisions are a "return to the law" and are "backed up by recent scholarship rebutting the views about mergers that took hold in the 1980s." CRS said that opponents characterized the draft guidelines as "'turn[ing] back the clock.'" These commenters argue that the draft guidelines (i) revive concepts associated with an earlier view of the Clayton Act and (ii) fail to account for "intervening economic and legal developments or the consumer welfare standard."

CRS said that Congress could "change or reinforce the way the Agencies analyze and challenge mergers, or the way courts consider those challenges" by (i) amending Section 7 of the Clayton Act as proposed in recent legislation or (ii) amending the Hart-Scott-Rodino Antitrust Improvements Act to alter the premerger notification scheme (see also previous coverage).