FTC, DOJ Move Closer to Issuing Merger Guidelines Document

The FTC and DOJ will issue draft merger guidelines in the “coming months,” FTC Chair Lina Khan said Tuesday during the agencies’ final public listening forum on the topic (see 2204270064). Republican commissioners warned the Democratic majority against politicizing the document and to base any changes on established legal and economic analysis.

Keeping pace with market realities is “critical” for ensuring the enforcement manual properly equips officials for identifying unlawful mergers and acquisitions, said Khan. She noted the guidelines, which have been periodically updated, were first issued in the 1960s and most recently amended in 2010. A new docket will help set the agencies’ approach to merger review, she said. The public docket was launched in January, and the agencies have received thousands of comments. They will open up the review for another round of public comment when the draft is released, Khan said.

The 2010 guidelines reflect current judicial precedent and economic principles, rather than “seasonal, political whims,” said Commissioner Christine Wilson. Guidelines that “depart from this tradition” would lack credibility and “soon fade.” The goal of antitrust enforcers should be to block transactions that would increase prices, decrease output and stifle innovation and to allow beneficial deals to proceed, she said. The guidelines have been a “common touchstone” for judges, merging parties and enforcers, she said: Courts ruling on challenges routinely cite the guidelines, even though they're nonbinding. Judges “find them to be persuasive” because they reflect consensus views the agency has developed over time, she said. She noted she supports the inquiry, citing the agency’s long history of critical self-examination to ensure the FTC is fulfilling its mission.

“I remain open to exploring well-supported, administrable changes to the 2010 guidelines,” said Commissioner Noah Phillips. “Those guidelines owe their success to the fact that they’re coherent, reflective of agency experience and practice, grounded in well-established economics and consistent with the current state of the law. Any revisions must also meet those criteria if they are to garner bipartisan support and endure.” In the face of historical inflation, agencies should encourage companies, big and small, to enter markets and meet consumer demand, he said: “We want them to be more efficient so that they can drive down cost and pass the savings onto consumers. Competition-enhancing mergers and acquisitions is one way they do that.”

Commissioner Rebecca Kelly Slaughter agreed with Phillips about the need for markets that allow new businesses to enter, innovate and grow. But she urged agencies to consider the long- and short-term impacts of transactions. A lesson learned in the past few years is that “increased consolidation and very concentrated markets can lead to supply chain shock and fragility and perhaps create efficiencies and lower prices in the short term but in the longer term real harm and real scarcity and price-gouging,” said Slaughter.

Commissioner Alvaro Bedoya spoke from Charleston, West Virginia, with three agency-invited speakers on pharmaceutical and healthcare issues. Bedoya argued vertical deals have historically received less scrutiny than horizontal ones. He said he’s thrilled the FTC brought two vertical merger challenges in the past year. The speakers -- West Virginia University Chief Health Officer Clay Marsh, retired accountant Jim Rossi and a West Virginia pharmacist-- challenged the FTC to more closely scrutinize vertical transactions.

Phillips raised concerns about how the agency selected speakers for its public forums, noting the final session is the only one that included input from the entire commission. Curating speakers to support a particular outcome is the “wrong approach,” he said, noting prior workshops on the topic included input from all commissioners. Slaughter defended the lineup of speakers in previous sessions, saying leadership did a “great job” pulling in voices that aren’t always represented by expensive D.C. lobbyists and lawyers. Phillips said the public should have “ample time” to consider potential changes to the guidelines.