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A Fresh Take

Insights on M&A, litigation, and corporate governance in the US.

| 5 minutes read

U.S. Antitrust Agencies Issue Final 2023 Merger Guidelines

On December 18, 2023, the Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”) issued the final version of the 2023 Merger Guidelines (the “Guidelines”).  The Guidelines are not legally binding but describe how the DOJ and FTC conduct merger analyses. The final Guidelines, which largely track the draft Guidelines issued in July, represent a significant departure from the 2010 Guidelines and reflect the expansive enforcement approach followed by current DOJ and FTC leadership. 

We summarize below (i) the key takeaways from the final Guidelines; (ii) notable changes from the draft Guidelines issued in July; and (iii) how the agencies will likely put the new Guidelines into practice.

Key Takeaways from the Guidelines  

As we observed of the draft guidelines when they were issued in July, the final Guidelines take a broad view of potential theories of competitive harm and discount potential benefits associated with mergers.  The key takeaways are:

  • Scrutiny of Less Concentrated Markets.  As in prior versions, the Guidelines prohibit mergers that significantly increase concentration in a highly concentrated market.  The 2023 Guidelines, however, substantially lower the threshold both for what constitutes a “highly concentrated market,” and for what is considered to “significantly increase concentration.”  In effect, more transactions will be captured under the agencies’ lower thresholds.  Similarly, the Guidelines presume illegality, although this may be rebutted, at lower market shares.  Under the Guidelines, a merger resulting in a 30% market share is presumptively illegal if the merger also significantly increases concentration. These changes mark a return to a more formalistic approach than what the agencies had used in the past several administrations.
  • Explicit Potential Competition Analysis. The Guidelines establish an explicit framework for evaluating a merger’s impact on actual and perceived potential competition, and they detail broad categories of subjective and objective evidence considered relevant to that analysis. These changes mark a significant shift from the 2010 Guidelines, which only briefly discussed the analysis of potential competition.  The Guidelines also note that an acquisition of a potential competitor can be anticompetitive, while at the same time discounting the competitive significance of other similarly situated potential entrants.
  • Enhanced Scrutiny of Vertical and Non-Horizontal Transactions.  Under the Guidelines, the agencies will scrutinize transactions between firms that do not compete directly, including by evaluating whether mergers could limit access to or raise costs on products or services that rivals use to compete, weakening or foreclosing them, or provide access to rivals’ competitively sensitive information, undermining competition or facilitating coordination.  A transaction may also harm competition by threatening to limit access to competitive inputs, and thereby deter potential rivals from entering the market or expanding their operations. 
  • Prohibiting Entrenchment or Extension of “Dominant Positions.”  The Guidelines provide a framework for evaluating transactions that could “entrench or extend” a “dominant” position.  A firm may be considered dominant based either on direct evidence or market shares showing “durable market power.”  Under the Guidelines, acquisitions by dominant firms could draw increased scrutiny, even in mergers not involving direct competitors. For example, the Guidelines describe how a dominant firm could be entrenched by the elimination of a nascent competitive threat, increasing barriers to entry, or depriving rivals of scale economies or network effects.  The Guidelines also proscribe mergers where the combined firm could “extend a dominant position from one market into a related market.” 

The Guidelines further highlight the potential for anticompetitive harm from mergers in the context of labor markets, “roll-up” strategies involving a series of acquisitions (even if no single transaction on its own would be unlawful), and deals that involve partial ownership of or minority investments in a firm. 

Changes from the Draft Guidelines

Despite receiving more than 30,000 comments to the draft guidelines and conducting three Merger Guidelines Workshops, the final Guidelines do not substantially differ from the July draft.  Below are the differences of note:

  • Additional Guidance Regarding Novel Theories of Competitive Harm. The final Guidelines elaborate on novel theories of harm outlined in the draft Guidelines, potentially expanding the ways that the agencies can find a merger to be anticompetitive.  For example, the final Guidelines detail how a nascent firm can grow into a competitive threat to a dominant incumbent.  A nascent competitor may add features or products over time, thereby intensifying competition with the incumbent.  Alternatively, a nascent firm may promote “ecosystem competition,” meaning it aggregates products and services from different firms that, in combination, serve as a competitive alternative to the incumbent.     
  • Increased Discussion of Rebuttal Evidence. The final Guidelines acknowledge that competitive concerns regarding a merger may be rebutted by evidence from the merging parties, including failing firm defenses, market entry, and certain efficiencies.  The final Guidelines slightly expand the views adopted in the draft guidelines.  For example, the Guidelines acknowledge that vertical transactions may result in reduced prices to consumers through the elimination of double marginalization.  That said, the Guidelines express deep skepticism of efficiencies claims generally, reasoning that “[c]ompetition usually spurs firms to achieve efficiencies internally,” and that many efficiencies can be achieved through means short of a merger. 
  • Some Softening of Presumptions and Focus on Market Power. The final Guidelines soften guidance indicating when a merger is presumptively anticompetitive, focusing instead on the consideration of market power. For example, regarding entrenchment, the draft guidelines’ 30% market-share threshold for a “dominant position” has been replaced with a requirement of “durable market power.”  The draft Guidelines similarly presumed that a vertical merger is anticompetitive if one of the merging parties has greater than 50% share of an input used by rivals.  In the final Guidelines, the use of market structure in the analysis of foreclosure – i.e., where a 50% foreclosure share was “sufficient . . . to conclude” a merger may violate the Clayton Act – is now explicitly tied to “monopoly power” (although, in a footnote, the Guidelines note the agencies will “generally infer” that a firm has monopoly power if it has a share of 50% or more). 
  • Reemphasis on Economic and Evidentiary Tools. As explained by the Chief Economist in the DOJ’s Antitrust Division and the Director of the FTC’s Bureau of Economics, “some commentators were concerned that putting the economic tools in the appendices [of the draft guidelines] was a signal that the tools, and economic analysis more generally, are less important.”  The final Guidelines promote these economic and analytical tools out of the appendix and into their own section, clarifying “that the economic tools are an integral part” of the agencies’ analytical process. 

What Comes Next?  

The Guidelines reflect the DOJ’s and FTC’s current approach to merger review. In that sense, they signal business as usual under the Biden administration.  Their long-term implications will be determined in future merger litigation, as courts decide whether to adopt the Guidelines’ reasoning in their decisions.  The agencies have presumably sought to encourage judicial adoption by citing extensively to Supreme Court caselaw. Yet many of the cited decisions predate the 1982 Horizontal Merger Guidelines, which established the modern framework for merger analysis that has remained in place for more than 40 years. Merging parties defending transactions will likely cite more recent judicial precedent to undermine the Guidelines.  It remains to be seen how courts will respond.

In the interim, merging parties should continue to expect close scrutiny of mergers, even if they do not involve direct competitors.  Global antitrust enforcers are instituting more aggressive merger enforcement, similar to the DOJ and FTC.  Early antitrust assessment is critical for anticipating global review timelines and outcomes, informing both transaction negotiations and antitrust strategy – including the possibility of litigation.

If you have any questions, feel free to reach out to our Merger Antitrust Team, including Jamillia Ferris, Mary Lehner, Bruce McCulloch, Jenn Mellott, Meghan Rissmiller, Jan Rybnicek, and Justin Stewart-Teitelbaum.


antitrust and competition, litigation, m&a