A new approach to merger review?
At the first annual DOJ-FTC Justice Leaders Summit held on April 4, 2022, DOJ Assistant Attorney General (“AAG”) Jonathan Kanter said the Division “has taken significant steps to reject risky settlements” to resolve merger cases, and that the agency is “more committed than ever to litigate” when authorities believe a violation has occurred. To support this increased focus on litigation, Kanter said he has designated two assistant deputy attorneys general to oversee the Division’s litigation role to ensure the agency is “ready to try cases up to to the verdict”. Kanter also said the Division has a preference for litigation over “fragile” and “risky” settlements that “often fail.”1
At the ABA Spring Meeting on April 6, 2022, Senior Assistant Deputy Attorney General (DAAG) Doha Mekki reiterated AAG Kanter’s statements that the Division is not inclined to accept settlements in the merger cases, and is more “considering remedies” than “fully remedying lost competition” as a result of a consummated merger. Mekki also said the Division prefers “clean remedies”, with a preference for structural relief over behavioral relief. Mekki also echoed Kanter’s commitment to increased litigation in merger cases, promising that parties will see “faster access to courts” and that the Division will be ready to file a complaint even before the parties have certified substantial compliance.2
Holly Vedova, director of the FTC’s Competition Bureau, also warned that the FTC “is not responsible for accepting weak or uncertain settlements” and will adopt a “new approach to merger review” in response to the recent increase in merger requests. . Under this new approach, Vedova said the FTC would prioritize “matters that have the greatest impact and reach,” and advised parties to “offer meaningful structural relief” instead of behavioral remedies. Additionally, Vedova cautioned that the FTC’s merger review process should not be viewed as a “concierge service” provided by the agency to enable parties to reach deals on time, and that the FTC does not will not sacrifice rigor for opportunity. As a result, Vedova said early termination is unlikely to resume unless Congress provides the FTC with significantly more resources.3
FTC Chair Lina Khan said the agency is looking for ways to deter parties from offering illegal agreements and, as part of that effort, will return to the practice of using pre-approvals in settlements. merger. Chairman Khan also said the FTC intends to examine how “monopolization and illegal agreements” affect a wide range of market participants, including workers, and said the FTC will investigate the effect of a proposed labor market transaction as part of its merger review analysis. . Chairman Khan also expressed interest in the possible revision of the Hart-Scott-Rodino (HSR) merger notification form to collect more “front-end” information when a deal is initially notified to the agency to allow law enforcement to conduct a more “timely and expeditious” investigation. effective investigation. 4
Revised Federal Merger Guidelines: What to expect
With respect to the FTC and DOJ’s ongoing process to revise federal merger review guidelines,5 DAAG Mekki is committed to creating guidelines that are written in plain language and understandable to the general public. Mekki said the agencies intend to engage in a “transparent and inclusive” 6 review process, citing as an example of this effort a series of joint FTC/DOJ listening sessions held throughout the spring to allow agencies “to hear from those who have experienced the effects of the mergers and acquisitions” in the food and agriculture, healthcare, media and entertainment, and technology markets. 7
Chairman Khan said the revised guidelines should create greater predictability, clarity and consistency in how agencies review mergers.8 She said that among the topics being considered in the review process are the use of presumptions, nascent competition, the role of direct evidence in market definition, how to update the guidelines’ conceptual framework to take account of digital markets and the manageability of standards. .9
FTC Commissioner Rebecca Slaughter said she believes the revised guidelines should move away from treating horizontal and vertical mergers as entirely separate and should place less emphasis on the pro-competitive benefits and efficiencies of vertical style transactions. Commissioner Slaughter said she thinks ‘the use of presumptions is really helpful’ and that to be effective, guidelines should be clear, reliable and transparent. Commissioner Slaughter also said she would like the revised guidelines to have a “strong deterrent effect”, noting that the use of presumptions can be helpful in allowing parties to more reliably predict which mergers are likely to harm competition. Slaughter also expressed a preference for a set of guidelines covering both horizontal and vertical transactions, as it is rare to see transactions, especially non-horizontal transactions, that are exclusively vertical and do not involve a related market. or additional horizontal component. ten
FTC Commissioner Christine Wilson disagreed that the guidelines should reduce efficiencies and said “consumer welfare and competition” should be at the center of the agency merger review process, not “protecting less effective rivals”. Commissioner Wilson also argued for consensus in issuing guidelines that “reflect the best ideas in economics and legal precedent.”11
Although DOJ and FTC leaders gave no indication of when the revised merger guidelines will be released, it is clear that changes to the agency merger review process are already underway. Moreover, the agencies are clearly trying to move away from the long-standing practice of settling merger investigations with negotiated measures (structural or behavioral) when they identify proven harm to competition. Merging parties should recognize that law enforcement authorities are increasingly wary of merger litigation and are unlikely to engage in traditional settlement negotiations. This change could have several consequences, including (1) providing more time in the merger agreement deadline for potential litigation and (2) determining whether the parties should adopt a “fix first” assignment before submit their HSR deposits on the main operation.
1 press release from the Ministry of Justice, Deputy Attorney General Jonathan Kanter delivers opening remarks at the Spring 2022 Law Enforcement Summit (April 4, 2022) available here.
2 70and ABA Antitrust Law Spring MeetingAgency Update with Department of Justice (April 6, 2022).
3 70and ABA Antitrust Law Spring MeetingAgency Update with FTC Bureau Directors (April 8, 2022).
4 70th Antitrust Spring Meeting, Implementers Roundtable (April 8, 2022).
5 Federal Trade Commission press release, the Federal Trade Commission and the Department of Justice seek to strengthen
Enforcement Against Illegal Mergers (January 18, 2022) available here.
6 70and ABA Antitrust Law Spring MeetingAgency Update with Department of Justice (April 6, 2022).
7 Federal Trade Commission press release, FTC, Department of Justice Launch Listening Forums on Direct Effects of M&As (March 17, 2022) available here.
8 70th Antitrust Spring Meeting, Implementers Roundtable (April 8, 2022).
9 FTC Enforcers Summit Transcript (April 4, 2022).
10 70th ABA Antitrust Spring Meeting, An overhaul of US merger guidelines (April 7, 2022).
11 70th ABA Antitrust Spring Meeting, Biden’s Big Moves: Antitrust Beyond Big Tech (April 7, 2022).