Markets Wired

The Federal Trade Commission today released for public comment a proposed revision of the Horizontal Merger Guidelines.  The updated Guidelines, which outline how the federal antitrust agencies evaluate the likely competitive impact of mergers and whether those mergers comply with U.S. antitrust law, are being revised jointly by the FTC and the Department of Justice.  The Guidelines were issued by the two agencies in 1992 and were last revised in 1997.  Today’s revisions are designed to more accurately reflect the way the FTC and DOJ currently conduct merger reviews.

“Eighteen years have passed since the Horizontal Merger Guidelines were revised.  During that time the agencies’ approach has evolved significantly, and the Guidelines should reflect that,” said FTC Chairman Jon Leibowitz.  “The proposed Guidelines put out for comment today reflect the current state of merger analysis at the FTC and DOJ, and will help make the process more transparent to American businesses and courts.  By inviting comments from all stakeholders, we’ll make sure that the final Guidelines are clear and accurate in conveying the Agencies’ merger enforcement intentions.”

The proposed revisions are the product of the agencies’ collective experience since 1992 as well public comments and a series of joint public workshops the two agencies held over the past six months to discuss whether an update to the Guidelines is warranted.  The five workshops were open to the public and generated a large number of comments from attorneys, academics, economists, consumer groups, and businesses.  All the written comments are posted on the FTC’s Web site.  Many parts of the proposed Guidelines reflect refinements and changes previously identified in the “Commentary on the Horizontal Merger Guidelines,” which the agencies jointly issued in 2006.

Among the clarifications and differences between the current and proposed Guidelines are the following:

• The proposed 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.
• The proposed Guidelines 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.
• The proposed Guidelines explain that market definition is not an end itself or a necessary starting point of merger analysis, but instead a tool that is useful to the extent it illuminates the merger’s likely competitive effects.
• The proposed Guidelines provide an updated explanation of the hypothetical monopolist test used to define relevant antitrust markets and how the agencies implement that test in practice.
• The concentration levels that are likely to warrant either further scrutiny or challenge from the agencies are updated in the proposed Guidelines.
• The proposed Guidelines provide an expanded discussion of how the agencies evaluate unilateral competitive effects, including effects on innovation. 
• The proposed Guidelines provide an updated section on coordinated effects.  They clarify that coordinated effects, like unilateral effects, include conduct not otherwise condemned by the antitrust laws.
• The proposed Guidelines 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. 
• The proposed Guidelines add new sections on powerful buyers, mergers between competing buyers, and partial acquisitions.

The Commission vote approving issuance of the proposed revised Guidelines for public comment was 5-0.  The proposed Guidelines are available now on the FTC’s Web site and as a link to this press release.  Public comments are being accepted for 30 days, until May 20, 2010. 

HOW TO SUBMIT COMMENTS:  Interested parties are invited to submit written comments electronically or in paper form.  Because paper mail addressed to the FTC is subject to delay due to heightened security screening, please consider submitting your comments in electronic form using the following weblink: https://public.commentworks.com/ftc/hmgrevisedguides (and following the instructions on the Web-based form).  Comments should refer to “HMG Revision Project – Comment, Project No. P092900” to facilitate the organization of comments.  A comment filed in paper form should include this reference both in the text and on the envelope, and should be mailed or delivered to the following address:  Federal Trade Commission, Office of the Secretary, Room H-135 (Annex P), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: hmgWorkshops@ftc.gov

(HMG.final)
(FTC File No. P092900)