Comments on Draft Merger Guidelines

Comments on Draft Merger Guidelines
Author: Gregory J. Werden
Publisher:
Total Pages: 0
Release: 2023
Genre:
ISBN:

On July 18, 2023, the Agencies responsible for enforcing antitrust law relating to mergers--the U.S. Department of Justice and the Federal Trade Commission--published draft Merger Guidelines (dMGs) for comment. This comment reflects cumulative experience from four decades as an enforcer, from researching and writing approximately 90 articles and book chapters relating to the competitive effects of mergers and their assessment, and from involvement in the preparation of all prior Merger Guidelines issued by the Agencies over the past half-century. Unlike prior Merger Guidelines, the dMGs do not promote the rule of law by articulating self-imposed limits to the exercise of discretion. As compared with prior Guidelines, the dMGs say less about which mergers the Agencies intend to challenge and especially about which mergers they intend not to challenge. The dMGs are more of a legal brief arguing that the Agencies have enormous discretion and that merging firms have an insuperable burden with any defense put forward.The dMGs assert case law support for the policies articulated, but many of the cases do not support the policies for which they are cited, and many of the policies lack any support in law. As a general matter, the law is less receptive than the dMGs suggest to arguments that mergers substantially lessen competition, and more receptive to rebuttal arguments.

Comments on the 2023 Draft Merger Guidelines

Comments on the 2023 Draft Merger Guidelines
Author: David Berger
Publisher:
Total Pages: 0
Release: 2023
Genre:
ISBN:

The DOJ and FTC clarify the role of labor market power ("monopsony") in the 2023 draft merger guidelines. The draft states in Guideline 11 that the structural presumption threshold applies to labor market concentration, while also suggesting that a stricter threshold may be warranted in labor markets. The post-merger Herfindahl-Hirschman Index (HHI) that defines a highly concentrated market is 1800, which is lower, and so stricter, than the 2010 guidelines. We provide five comments on the draft guidelines based on our recent work Berger, Hasenzagl, Herkenhoff, Mongey, and Posner (2023). (1) Explicitly addressing monopsony in the draft guidelines is grounded in economic theory and empirical research. (2) Workers benefit from the lower threshold for highly concentrated markets. (3) The narrow nature of labor markets and high degree of monopsony power in the U.S. may warrant an even lower threshold. For example, merger simulations indicate that workers would benefit if the agencies lowered the HHI threshold further - to 1500 or 1000. (4) Worker welfare is central to the 2023 draft guidelines but the language is not always clear about this. The guidelines should make clear that degradations of "worker welfare" or "total compensation" indicate anticompetitive effects. (5) Dominant firms that can slow wage growth - but not freeze or cut wages - are subject to Guideline 7.

The Merger Review Process

The Merger Review Process
Author: Ilene Knable Gotts
Publisher: American Bar Association
Total Pages: 906
Release: 2006
Genre: Business & Economics
ISBN: 9781590316528

This comprehensive guide to the process and procedures of merger review at the federal agencies makes the federal review process more comprehensible and accessible to parties and their counsel.

Horizontal Merger Guidelines

Horizontal Merger Guidelines
Author: Peter Carstensen
Publisher:
Total Pages: 0
Release: 2010
Genre:
ISBN:

The Antitrust Division of the Department of Justice and the Federal Trade Commission have commenced a process of reviewing the Merger Guidelines that were last subject of a comprehensive revision in 1993. The agencies are holding a series of workshops and have solicited comments on a number of questions that they have formulated. The questions and the workshops, however, fail to take account of a major development in the assessment of mergers: their impact on the buying side of the market. Empirical data show that buying side effects can be quite substantial; yet the Guidelines devote only two sentences to discussing the analysis of this topic. These comments present a review of the central issues that ought to be included in comprehensive merger guidelines concerning buyer power: appropriate definition of the buying side product and geographic dimensions of the relevant markets, the likely competitive effects including the potential for such effects in various levels of market concentration, and the resulting thresholds above which more serious evaluation of mergers creating increased buyer power ought to be investigated. The basic point of these comments is that the revised Merger Guidelines should directly and clearly address the issue of buyer power resulting from mergers and provide appropriate standards for the evaluation of such effects.

The 2020 Vertical Merger Guidelines

The 2020 Vertical Merger Guidelines
Author: Steven C. Salop
Publisher:
Total Pages: 19
Release: 2020
Genre:
ISBN:

The FTC and DOJ requested comments on their draft Vertical Merger Guidelines in January 2020. This article is a complete alternative set of suggested Vertical Merger Guidelines that reflects and supplements the approach explained in the comments submitted by the author along with Jonathan. Baker, Nancy Rose and Fiona Scott Morton, as well as their other comments, and might be read in conjunction with those comments. This suggested revision of the Agencies' draft expands the list of potential competition harms and provides illustrative examples. It expands and unifies the discussion and treatment of potential competitive benefits. It deletes the quasi-safe harbor and suggests the circumstances under which competitive harms raise lessened concerns on the one hand and heightened concerns on the other.

Quantifying the Increase in 'Effective Concentration' from Vertical Mergers that Raise Input Foreclosure Concerns

Quantifying the Increase in 'Effective Concentration' from Vertical Mergers that Raise Input Foreclosure Concerns
Author: Steven C. Salop
Publisher:
Total Pages: 0
Release: 2020
Genre:
ISBN:

This comment responds to the request by the Federal Trade Commission and the Department of Justice's Antitrust Division for public comment on the draft 2020 Vertical Merger Guidelines. In this comment, we show that there is an inherent loss of an indirect competitor and competition when a vertical merger raises input foreclosure concerns. We also show that it then is possible to calculate an effective increase in the HHI measure of concentration for the downstream market. We refer to this “proxy” measure as the “dHHI.” We derive the dHHI measure by comparing the pricing incentives and associated upward pricing pressure (“UPP”) involved in two alternative types of acquisitions: (i) vertical mergers that raise unilateral input foreclosure concerns (and the associated vertical GUPPI measures), and (ii) horizontal acquisitions of partial ownership interests among competitors that raise unilateral effects concerns (and the associated modified GUPPI and modified HHI measures).