New Horizontal Merger Guidelines Issued; First Changes In 18 Years

The Department of Justice and the Federal Trade Commission have issued revised Horizontal Merger Guidelines that outline how the federal antitrust agencies evaluate the likely competitive impact of mergers and whether those mergers comply with U.S. antitrust law. The Horizontal Merger Guidelines, which were first adopted in 1968, and revised in 1992, serve as an outline of the main analytical techniques, practices and enforcement policies the Department of Justice and the FTC use to evaluate mergers and acquisitions involving actual or potential competitors under federal antitrust laws.

The changes to the guidelines mark the first major revision of the merger guidelines in 18 years. Many of the changes reflect issues previously identified in the "Commentary on the Horizontal Merger Guidelines," which the agencies jointly issued in 2006. The FTC issued proposed revisions for public comment on April 20, 2010. All of the written comments are posted on the FTC’s website at www.ftc.gov/os/comments/hmgrevisedguides/index.shtm.
 
The 2010 guidelines are different from the 1992 guidelines in a number of important ways. The guidelines:
·         Clarify that merger analysis does not use a single methodology, but is a fact-specific process through which the agencies use a variety of tools to analyze the evidence to determine whether a merger may substantially lessen competition.
·         Introduce a new section on "Evidence of Adverse Competitive Effects." This section discusses several categories and sources of evidence that the agencies, in their experience, have found informative in predicting the likely competitive effects of mergers.
·         Explain that market definition is not an end itself or a necessary starting point of merger analysis, and market concentration is a tool that is useful to the extent it illuminates the merger’s likely competitive effects.
·         Provide an updated explanation of the hypothetical monopolist test used to define relevant antitrust markets and how the agencies implement that test in practice.
·         Update the concentration thresholds that determine whether a transaction warrants further scrutiny by the agencies.
·         Provide an expanded discussion of how the agencies evaluate unilateral competitive effects, including effects on innovation.
·         Provide an updated section on coordinated effects. The guidelines clarify that coordinated effects, like unilateral effects, include conduct not otherwise condemned by the antitrust laws.
·         Provide a simplified discussion of how the agencies evaluate whether entry into the relevant market is so easy that a merger is not likely to enhance market power.
·         Add new sections on powerful buyers, mergers between competing buyers, and partial acquisitions.
 
The Bank Merger Competitive Review guidelines, which the federal banking agencies and the Department of Justice developed in 1995 to facilitate the competitive review of bank mergers, remain unchanged.