Joseph F Winterscheid (pictured), partner and head of the global Antitrust & Competition Practice Group at McDermott Will & Emery, outlines the implications of the FTC’s revised Horizontal Merger Guidelines.
Last week, the Federal Trade Commission (FTC) released the final revised Horizontal Merger Guidelines that describe the FTC and U.S. Department of Justice’s (DOJ’s) methodology for analysing the likely competitive impact of mergers and acquisitions between competitors.
While the Guidelines de-emphasise the role of market definition in the FTC’s and DOJ’s analyses of transactions, they largely memorialize the agencies’ existing practices in the merger review process.
The new guidelines’ shift in focus seems to be a response to the agencies’ difficulties in sustaining their burden of proof concerning market definition in past unsuccessful merger challenges. By placing greater emphasis on evidence of a transaction’s competitive effects, the agencies allow themselves more flexibility to avoid complicated market definition issues and instead address the central question posed by a transaction, namely whether it will result in anti-competitive effects.
So, while the benefits of the final Horizontal Merger Guidelines to the government may be clear, what impact will they have on Corporate America? Parties will need to be prepared to marshal evidence on a broader range of potential issues in defending their proposed transactions. Evidence of competitive effects also will be critical to parties that have already consummated transactions, which remain subject to post-closing challenges.
Overall, parties will need to exercise greater care in how they discuss and document competition and pricing decisions in internal documents.
Yet, only time will tell how much weight courts will give the revised guidelines, especially given long-standing case law that calls for defining the relevant market as the first step in analysing a transaction’s likely competitive effects.
