US Antitrust Agencies Issue Final Merger Guidelines, Signal Continued Robust Enforcement

On December 18, 2023, the FTC and DOJ released final Merger Guidelines that, like the draft version issued earlier this year, reflect the antitrust Agencies’ aggressive approach to merger enforcement and could result in significantly more transactions being subject to challenge.

The final version of the Guidelines retains the core substance of the draft, but makes a few noteworthy changes. For example, it places greater emphasis on market power and reduces somewhat the emphasis on market shares, although market structure remains more significant than it had been under the 2010 Horizontal Merger Guidelines. In addition, the Guidelines offer more clarity concerning rebuttal evidence that merging parties may offer to refute an inference that a transaction lessens competition.

Key Elements of the Guidelines

For horizontal mergers (mergers between actual or potential competitors) the Guidelines reaffirm the lower market share thresholds at which the Agencies will presume mergers to be anticompetitive.

For mergers between firms that compete in labor markets, competitive concerns may arise at even lower concentrations.

For vertical mergers (mergers between firms at different levels of the supply chain) the final version scales back a presumption, first introduced in the draft Guidelines, that a merger may substantially lessen competition if the merged firm controls a 50 percent share of a product or service that its rivals also use. Instead, the Agencies “will generally infer, in the absence of countervailing evidence” that a merged firm will have the ability to foreclose competitors if it has a 50 percent share.

The Guidelines are particularly tough on dominant firms, which can be identified “based on direct evidence or market shares showing durable market power” instead of the 30 percent threshold in the draft version. Acquisitions by dominant firms may be challenged if the Agencies determine they increase barriers to entry or switching costs, deprive rivals of scale, or otherwise “entrench [the firm’s] dominant position.” The elimination of nascent competition is addressed at length.

The Agencies will scrutinize patterns of acquisitions, including both industry-wide trends towards consolidation and serial acquisitions by a single firm. The Guidelines now identify several types of consolidation trends that may trigger scrutiny. Minority investments are likewise subject to enhanced scrutiny.

We have updated our earlier analysis of the draft Guidelines to reflect these changes. To read our complete analysis, click here.