US agencies release new merger guidelines

The US Federal Trade Commission and Department of Justice today announced the release of new horizontal merger guidelines. These replace the 1992 merger guidelines and follow the release of  draft revised guidelines in April this year. Comments/submissions on the draft guidelines can be viewed here.

The press release lists key changes since the 1992 Guidelines (FTC Press Release / DOJ Press Release) – in particular, the new guidelines:

* Clarify that merger analysis does not use a single methodology, but is a fact-specific process through which the agencies use a variety of tools to analyze the evidence to determine whether a merger may substantially lessen competition.

* Introduce a new section on “Evidence of Adverse Competitive Effects.” This section discusses several categories and sources of evidence that the agencies, in their experience, have found informative in predicting the likely competitive effects of mergers.

* Explain that market definition is not an end itself or a necessary starting point of merger analysis, and market concentration is a tool that is useful to the extent it illuminates the merger’s likely competitive effects.

* Provide an updated explanation of the hypothetical monopolist test used to define relevant antitrust markets and how the agencies implement that test in practice.

* Update the concentration thresholds that determine whether a transaction warrants further scrutiny by the agencies.

* Provide an expanded discussion of how the agencies evaluate unilateral competitive effects, including effects on innovation.

* Provide an updated section on coordinated effects. The guidelines clarify that coordinated effects, like unilateral effects, include conduct not otherwise condemned by the antitrust laws.

* Provide a simplified discussion of how the agencies evaluate whether entry into the relevant market is so easy that a merger is not likely to enhance market power.

* Add new sections on powerful buyers, mergers between competing buyers, and partial acquisitions.

Naturally, the new guidelines already have some critics, including Republican and FTC  Commissioner J Thomas Rosch who, although concurring with the issuance of the guidelines, criticised them for not living up to their promise of being a “complete and accurate description of what our enforcement staff considers in merger investigations and that they will be a helpful guide to courts”.  View Commissioner Rosch’s press release here and further commentary here.

Australia also recently (November 2008) adopted new merger guidelines which replaced its 1999 Merger Guidelines.