On December 18, 2023, the DOJ and FTC jointly released the final 2023 Merger Guidelines that describe how the agencies will evaluate proposed merger and acquisition transactions. Despite significant editing, and calls from industry to moderate the guidelines, the agencies essentially doubled down on their vision, which we have previously described, promising a more aggressive review of future transactions while providing limited concrete guidance for merging companies.
Changes From Draft Guidelines
We summarize some of the changes made between the draft guidelines and the final version. None of these, though, are major revisions. Beyond what is highlighted here, most of the revisions are wordsmithing and the addition of more contemporary case citations, perhaps in response to criticism that the case law cited was all very old.
- Multimarket Contact Theory. The agencies have inserted into Guideline 3 an additional example of a situation that may give rise to an anticompetitive alignment of incentives that can be a secondary factor to support a finding of coordinated effects. Guideline 3 now states that if a merger results in a situation in which the merged firm competes with another firm in multiple markets (“multi-market contact”), firms might have an incentive to compete less aggressively in some markets in anticipation of reciprocity by rivals in other markets.
- Weakened Threshold for Foreclosure in Vertical Mergers. Draft Guidelines 5 and 6 have been combined into new Guideline 5, which focuses on vertical merger issues. The agencies removed the bright-line presumption of illegality where one merging party has a 50% share of a “related market” into which the merging counterparty sells or buys. Instead, the text states that the presumption may be found if the merged firm is approaching or has monopoly power over the related product, and the related products is competitively sensitive. And the 50% share figure resurfaces in footnote 30, albeit with slightly weaker language stating that the agencies “will generally infer” a violation if the 50% threshold is crossed.