On April 20, 2010, the Federal Trade Commission ("FTC") and the
Department of Justice ("DOJ") (collectively the "Agencies") released a proposed
updated version of the Horizontal Merger Guidelines ("Guidelines"). The
Guidelines are a set of internal rules that set out the analytical framework
and standards used by the Agencies to assess the impact on competition of a
proposed merger and guide businesses that are considering a merger. The Guidelines do not have the force of law, but
often reflect current economic thought and are relied upon extensively in
litigation by parties and the courts.
Merger Guidelines were first issued in 1968. They were issued again in
1982 and then revised in 1984, 1992 and 1997. The Proposed Guidelines,
according to the Agencies, are intended to "more accurately reflect the way the
FTC and DOJ currently conduct merger reviews" and "to assist the business
community and antitrust practitioners by increasing the transparency of the
analytical process underlying the Agencies' enforcement decisions."
While many feel that the existing Guidelines are long overdue for a
revision, critics see some of the proposals as a response by the Agencies to
recent high profile set backs to merger challenges. For example, the Agencies
could not stop the Whole Foods/Wild Oats merger due in part to their inability
to demonstrate harm to competition in a relevant market. Under the
Proposed Guidelines, "market definition" is deemphasized and described as "not
an end in itself: it is one of the tools that the agencies use to assess
whether a merger is likely to lessen competition." This position may not
initially meet with much success in litigation however, since many courts,
including the Supreme Court, have come to expect the Agencies to establish the
relevant market as a preliminary matter. Other elements in the merger analysis
have been updated as well, e.g., the approach to "unilateral effects".
Overall, the Proposed Guidelines appear to be an effort by the Agencies
to move away from the formalistic step-by-step approach that characterizes the
current Guidelines. The public comment period ends May 20.