The Final Merger Guidelines: A Nightmare Before Christmas?

Sean Heather
Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce

Published

December 19, 2023

Yesterday, the Department of Justice and Federal Trade Commission issued revised, final merger guidelines, which largely track their earlier draft. Like the draft, the final guidelines seek to rewrite decades of antitrust policy by declaring structural presumptions against mergers that increase market concentration and by downplaying the possibility of merger efficiencies.

How the Final Merger Guidelines Differ from Previous Drafts

While the Chamber’s analysis of the draft guidelines—available here and here—largely remain valid for the final guidelines, there are some changes to note.

The final guidelines ignored most of our concerns, though they do include a few improvements. For instance, the final guidelines use less prescriptive language; instead of saying, “Mergers Should Not Significantly Increase Concentration in Highly Concentrated Markets” and “Mergers Should Not Entrench or Extend a Dominant Position,” the final guidelines say, “Mergers Raise a Presumption of Illegality When They Significantly Increase Concentration in a Highly Concentrated Market” and “Mergers Can Violate the Law When They Entrench or Extend a Dominant Position.” Similarly, the final guidelines slightly soften their hostility to merger efficiencies; saying, “The Agencies will not credit efficiencies if they reflect or require a decrease in competition in a separate market,” rather than “efficiencies are not cognizable if they will accelerate a trend toward concentration.” The final guidelines downplay the language about so-called “trends in concentration,” perhaps in response to our work pointing out that, since 2007, industrial concentration actually has been declining.”

On balance, however, the final guidelines retain the problems of the original draft.

Why these Final Guidelines are Important

The final guidelines attempt to turn back the clock to the 1960s on U.S. merger policy. They rely on outdated cases and economic ideas while ignoring recent cases that reject the Agencies’ theories. As just one example of this, the final guidelines include some quotes from a recent Fifth Circuit decision that credits some of the FTC’s theories, yet they omit critical language from other recent cases that reject the Agencies’ theories. Like the draft, the final guidelines draw arbitrary lines and give the agencies tremendous discretion to pick winners and losers, dictate market structures, and play to favored constituencies.

What the Final Guidelines Mean for the Future of Mergers and Acquisitions

The final guidelines represent the views of the Agencies toward mergers and acquisitions and can now be cited in litigation. The Agencies will rely upon these guidelines as part of their review process and, likely, use them to discourage many mergers that, in the past, would have raised few competitive concerns.

The ultimate test, however, will come in the courts over time. The guidelines do not have the force of law but instead merely represent the agencies’ view of what they would like the law to reflect. We believe that the courts will view these guidelines skeptically because, as we have noted previously, they do not reflect a consensus view of the law and do not incorporate the latest economic thinking. If adopted and embraced by the courts, the guidelines would damage the U.S. economy, capital markets, and global competitiveness. They would hamstring the ability of small companies to raise capital and of larger companies to enter new markets.

Rather than modifying antitrust regulations to align with their policy preferences, the FTC and DOJ should adhere to long-established judicial precedents. These precedents permit them to oppose a merger only when there is a solid analytical foundation to determine that it would negatively impact consumers. By upholding this framework and resisting the FTC and DOJ's attempt to expand their authority, we can safeguard the United States' status as the world's most dynamic and innovative economy.