Conflict or Continuity? An Analysis of the 2023 Merger Guidelines
- Author(s):
- Alexander Raskovich
- Posted:
- 11-2024
- Law & Economics #:
- 24-26
- Availability:
- Full text (most recent) on SSRN
ABSTRACT:
This Article addresses some key issues important to a prospective assessment of the possible effects on merger formation and enforcement of the DOJ and FTC's 2023 Merger Guidelines (MGs) . The MGs differ from previous guidelines in several respects. First, rather than a single encompassing set of guidelines, eleven individual guidelines are called out. Some have argued that delineating separate sets of circumstances that can give rise to a violation provides the Agencies with greater analytic flexibility than the Agencies previously had. This claim is questionable. Second, the new market share thresholds in the MGs would ensnare many competitively benign mergers as presumptively anticompetitive, and this would suffice for a challenge, regardless of the absence of any reasonable finding of likely anticompetitive effect. Third, in contrast with earlier merger guidelines, the MGs emphasize how a merger "could," rather than "would," violate the antitrust laws. This weakening of the proof standard conflicts with case law precedent. Fourth, the MGs cite to a large number of legal precedents, many of them many decades old. Earlier merger guidelines had no such references to case law precedent, noting instead that guidelines may be revised from time to time to "reflect the ongoing accumulation of experience at the Agencies" and "new learning." Finally, the treatment of efficiencies in the MGs appears to be more dismissive and hostile than in recent guidelines. The MGs discussion of efficiencies begins with the peremptory statement that "possible economies [from a merger] cannot be used as a defense to illegality." But when efficiencies have affected enforcement outcomes by the Agencies, typically they have not been used as a defense against a finding of anticompetitive effect, but rather as an integral part of determining whether there is any anticompetitive effect in the first place. The 2010 Horizontal Merger Guidelines state that "a primary benefit of mergers to the economy is their potential to generate significant efficiencies and thus enhance the merged firm's ability and incentive to compete." Further, "[t]he Agencies seek to identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that are either competitively beneficial or neutral." The MGs offer no indication that mergers can have an upside. The foregoing innovations in the MGs are not only contrary to rational antitrust as a matter of economics and error-cost analysis, but are likely to have a chilly reception by the judiciary.