On December 18, 2023, the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) jointly released the final version of the Merger Guidelines. While the contours of the Guidelines largely follow the prior draft version, continuing to represent an expanded and more aggressive approach, the final document contains notable improvements relative to the draft. Despite the significant challenges posed by the Guidelines’ more interventionist approach, at various places the Agencies signal an openness to factual and economic evidence, which creates a number of opportunities and strategies for merging parties.
The most significant improvements from the draft—as described by the DOJ and FTC Chief Economists—include:
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Deleting the prior categorical presumption of illegality for vertical mergers involving a firm with greater than 50% share of an input used by rivals, instead “explicitly” tying “the use of market structure in the analysis of foreclosure . . . to ‘monopoly power’” and adding a requirement that the input is “competitively significant” (although stating in a footnote that the Agencies “will generally infer” monopoly power at shares greater than 50%);
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Replacing “the former 30% market-share threshold ... with an explicit reference to ‘durable market power’ as the trigger for an entrenchment concern,” which suggests the importance of barriers to entry in addition to shares of at least greater than 30% for an inference of a “dominant position”;
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Eliminating a “trend towards” concentration or vertical integration as a standalone basis to block a transaction, moving it instead to a “‘plus factor’ when analytically appropriate, and not a basis for a challenge on its own or a separate structural presumption;”
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Striking the prior “prohibition on considering ... competitive benefits that supported a trend toward concentration” or vertical integration (as would be the case with many or even most merger efficiencies); and
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Explicitly recognizing the role of elimination of double marginalization in vertical merger analysis.
New DOJ-FTC Merger Guidelines: Opportunities and Strategies for Merging Parties (PDF)