Industry Associations Weigh-In on FTC and DOJ Merger Enforcement Guidelines

In response to FTC and the DOJ's Request for Information ("RFI") on modernizing enforcement of the antitrust laws regarding mergers, industry groups raised concerns about incorporating the "common ownership hypothesis" into the guidelines and faulty built-in assumptions underlying mergers.

SIFMA

In its comment letter, SIFMA AMG asserted that the common ownership hypothesis is not necessary to incorporate into the merger guidelines because it (i) is unsettled among experts, (ii) does not justify regulatory action and (iii) would harm investors if it were to be incorporated into the guidelines. SIFMA AMG stated that incorporating the common ownership hypothesis into the Merger Enforcement Guidelines would be premature. SIFMA AMG emphasized that the agencies have the necessary tools to challenge anticompetitive partial acquisitions of rival firms.

ICI

On the common ownership issue, the Investment Company Institute ("ICI") stated that (i) there is no real-world evidence that common ownership plays any impact on how companies compete, (ii) considering common ownership in merger transactions would be inconsistent with Section 7 of the Clayton Act and (iii) there are no FTC/DOJ enforcement actions based on "harms to competition arising from common ownership or [that such] ownership has such effects."

ICI emphasized that "the impact of common ownership on competition is an unproven hypothesis" which stems from the preconceived notion that companies will "consider and place weight on the profits of other companies held by their minority owners when making business decisions." ICI noted that the evidence to support such a hypothesis is lacking, at least when it comes to regulated mutual funds and/or other institutional investors.

The U.S. Chamber of Commerce

The U.S. Chamber of Commerce ("the Chamber") stated that it "has serious concerns that the Agencies are attempting to use the RFI to rewrite substantive antitrust law based on faulty economic and legal assumptions." The Chamber argued that (i) "most mergers are procompetitive" contrary to what the RFI suggests; (ii) the U.S. economy is not concentrated, contrary to what the RFI states; (iii) the RFI should be incorporating current law and not law from prior decades that present a skewed policy preference and (iv) any future guidelines should "retain the objectivity and transparency that have allowed the existing guidelines, and their predecessors, to serve as effective tools for the courts, business community, and enforcement agencies."

American Investment Council

The American Investment Council ("AIC") argued that the current antitrust guidelines used by the Agencies on private equity transactions should remain in place. The AIC noted that "[t]here is no evidence, empirical or otherwise, to suggest that private equity transactions present "special characteristics" that require a new or different approach to merger control." As to serial acquisitions, the AIC stated that (i) they should be assessed on a case-by-case basis; (ii) they should be seen as "pro-competitive" when they seek to strengthen weak businesses as opposed to creating one dominant one and (iii) "[a]bsent evidence that private equity 'rollups' substantially lessen competition or tend to create a monopoly, they are not implicated by the statutory language of Section 7 of the Clayton Act."