Tougher Road Ahead For Major Mergers: Justice Department, Federal Trade Commission Launch Review Of Enforcement Guidelines

The Federal Trade Commission and the Department of Justice are launching plans to update and modernize merger enforcement guidelines, something that could mean more rigorous scrutiny of major tech and media transactions.

Lina Khan, the chairwoman of the FTC, and Jonathan Kanter, the chief of the DOJ’s antitrust division, on Tuesday announced a review of the framework that the agencies use to analyze proposed mergers. Before Khan and Kanter took their current roles, both have been outspoken about reining in the power of big tech, at a time when Congress considers new legislation aimed at Facebook, Apple, Amazon and Google.

In a press appearance, Khan cited the current merger boom, which has seen a doubling in filings from 2020 to 2021, and said that they have to ensure that the current guidelines “reflect the realities of the modern economy.”

The review process is expected to take about 12 months, with the agencies releasing a set of draft guidelines for further comment.

“We hope to finish this year, but we have a lot more to do along the way,” he said.

A bit coincidentally, their announcement of the review comes on the same day that Microsoft announced plans to acquire Activision Blizzard for nearly $69 billion. But a host of other mergers are awaiting the greenlight of the DOJ, including the Discovery-WarnerMedia combination and CAA’s planned purchase of ICM Partners, as well as the FTC, which is reviewing Amazon’s proposed acquisition of MGM. At the press conference, DOJ and FTC officials declined to address the status of any pending mergers.

The DOJ and the FTC are seeking public comment on any proposed changes to the merger guidelines, which still would have to be in line with existing antitrust laws. “A key overriding question is how effectively the current guidance documents capture the competitive issues raised by mergers today and whether these documents adequately equip enforcers to identify and proscribe unlawful, anticompetitive transactions,” the agencies said in announcing the review.

The agencies are seeking input on an extensive list of topics, including how markets are defined, the threshold for market concentration, threats to potential or new competition and the unique characteristics of digital markets.

A criticism of existing enforcement has been its heavy emphasis on the effect that major transactions have on consumer prices. The agencies said that they are “particularly interested” in whether the current guidelines underemphasize other factors, like the impact a merger may have on the labor market, innovation, product quality and potential competition. They also are seeking specific examples of mergers that have made it more difficult for rivals to compete.

Lawmakers, meanwhile, have sought to update antitrust laws. On Thursday, the Senate Judiciary Committee will consider the American Innovation and Choice Online Act, which would prohibit internet giants from favoring their own products or services in a way that materially harms competition on their platform. They also would be banned from discriminatory conduct. A similar version of the bill passed the House last summer, along with a set of other bills, but they have yet to advance to the floor.

Although the Senate bill has bipartisan support — it’s sponsored by Sen. Amy Klobuchar (D-MN) and Sen. Chuck Grassley (R-IA) — tech companies are lobbying against it, with help from the U.S. Chamber of Commerce.

Comments will be taken at regulations.gov. The comment period for the latest review will run through March 21.