A Competitive Advantage? FTC and DOJ Issue Antitrust Guidelines for Evaluating Vertical Mergers

According to FTC Chairman Joe Simons, “The new Guidelines reflect our current enforcement approach and, through increased transparency, will help businesses and practitioners understand how we evaluate vertical transactions. The new Guidelines also reflect our strong collaboration with the Department of Justice, and the substantial input that we received from the public.”

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Editor’s Note: On June 30, 2020, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) released new guidelines for mergers seeking to combine two or more companies that operate at different levels in the same supply chain, otherwise known as Vertical Mergers. Reflecting the evolution of policy since the issuance of the 1984 Non-Horizontal Merger Guidelines, both the FTC and DOJ announcements for the new Vertical Merger Guidelines and a full copy of the published joint guidelines are provided for your consideration.

Press Announcement from the Federal Trade Commission

FTC and DOJ Issue Antitrust Guidelines for Evaluating Vertical Mergers

New Vertical Merger Guidelines Provide Transparency on Analytical techniques, Practices, and Enforcement Policies

The Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ” or “Department”) issued today [June 30, 2020] new Vertical Merger Guidelines that outline how the federal antitrust agencies evaluate the likely competitive impact of vertical mergers and whether those mergers comply with U.S. antitrust law. These new Vertical Merger Guidelines mark the first time the Department and the FTC have issued joint guidelines on vertical mergers, and represent the first major revision to guidance on vertical mergers since the Department’s 1984 Non-Horizontal Merger Guidelines, which the Department withdrew in January of this year.

“These new Vertical Merger Guidelines are an important step forward in maintaining vigorous antitrust enforcement, and reaffirm our commitment to challenge vertical mergers that are anti-competitive and would harm American consumers,” said FTC Chairman Joe Simons. “The new Guidelines reflect our current enforcement approach and, through increased transparency, will help businesses and practitioners understand how we evaluate vertical transactions. The new Guidelines also reflect our strong collaboration with the Department of Justice, and the substantial input that we received from the public.”

“These new Vertical Merger Guidelines provide transparency in the important area of vertical merger analysis,” said Assistant Attorney General Makan Delrahim. “They explain our investigative practices as we apply them today and have applied them in recent years. The Guidelines will give greater predictability and clarity to the business community, the bar, and enforcers. I am grateful for the commitment, thoroughness, and dedication with which staff from both agencies worked on this project. This has been a successful process because of our robust public engagement and our excellent collaborative relationship with the FTC.”

A primary goal of the new Vertical Merger Guidelines is to help the agencies identify and challenge competitively harmful vertical mergers. To accomplish this, the Guidelines detail the techniques and main types of evidence that the agencies typically use to predict whether vertical mergers may substantially lessen competition. The Guidelines will help businesses, antitrust practitioners, and other interested persons by increasing transparency into the agencies’ principal analytical techniques, practices, and enforcement policies for evaluating vertical transactions.

The Commission vote to issue the Vertical Merger Guidelines was 3-2, with Commissioner Rohit Chopra and Rebecca Kelly Slaughter voting no. Chairman Simons and Commissioners Noah Joshua Phillips and Christine S. Wilson issued a statement. Commissioners Chopra and Slaughter issued dissenting statements.

Read the complete release at FTC and DOJ Issue Antitrust Guidelines for Evaluating Vertical Mergers


Press Announcement from the Department of Justice

Department of Justice And Federal Trade Commission Issue New Vertical Merger Guidelines

2020 Guidelines More Accurately Represent Agencies’ Merger Review Process

The Department of Justice and Federal Trade Commission issued today [June 30, 2020] new Vertical Merger Guidelines that outline how the federal antitrust agencies evaluate the likely competitive impact of mergers and whether those mergers comply with U.S. antitrust law. These new Vertical Merger Guidelines mark the first time the Department and the FTC have issued joint guidelines on vertical mergers, and represent the first major revision to guidance on vertical mergers since the Department’s 1984 Non-Horizontal Merger Guidelines, which the Department withdrew in January of this year.

In March 2019, Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division announced that a draft of new vertical merger guidelines was underway, following an FTC workshop in Fall 2018 on whether new vertical merger guidelines should be issued.

“As a joint effort of DOJ and the FTC, the new vertical merger guidelines will provide greater transparency and predictability to the marketplace when businesses combine at different levels of the supply chain,” said Deputy Attorney General Jeff Rosen.

“These new Vertical Merger Guidelines provide transparency in the important area of vertical merger analysis,” said Assistant Attorney General Delrahim. “They explain our investigative practices as we apply them today and have applied them in recent years.  The guidelines will give greater predictability and clarity to the business community, the bar, and enforcers. I am grateful for the commitment, thoroughness, and dedication with which staff from both agencies worked on this project. This has been a successful process because of our robust public engagement and our excellent collaborative relationship with the FTC.”

“These new Vertical Merger Guidelines are an important step forward in maintaining vigorous antitrust enforcement, and reaffirm our commitment to challenge vertical mergers that are anti-competitive and would harm American consumers,” said FTC Chairman Joe Simons. “The new guidelines reflect our current enforcement approach and, through increased transparency, will help businesses and practitioners understand how we evaluate vertical transactions. The new Guidelines also reflect our strong collaboration with the Department of Justice, and the substantial input that we received from the public.”

Vertical mergers combine two or more companies that operate at different levels in the same supply chain. A primary goal of the new Vertical Merger Guidelines is to help the agencies identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that either are competitively beneficial or likely will have no competitive impact on the marketplace. To accomplish this, the guidelines detail the techniques and main types of evidence the agencies typically use to predict whether vertical mergers may substantially lessen competition. The Guidelines will help businesses, antitrust practitioners and other interested persons by increasing transparency into the agencies’ principal analytical techniques, practices, and enforcement policies for evaluating vertical transactions.

The new Vertical Merger Guidelines reflect the agencies’ analysis of vertical mergers. The revised guidelines:

  • Explain that mergers often present both horizontal and vertical elements, and the agencies may apply both the Horizontal Merger Guidelines and the Vertical Merger Guidelines in their evaluation of a transaction, as part of a fact-specific process that involves a variety of tools to determine whether a merger may substantially lessen competition.
  • Clarify that its analytical techniques, practices, and enforcement policies apply to a range of non-horizontal transactions, including strictly vertical mergers, “diagonal” mergers, and vertical issues that can arise in mergers of complement.
  • Clarify that when the agencies identify a potential competitive concern in a relevant market, they will also specify one or more related products. A related product is a product or service that is supplied or controlled by the merged firm and is positioned vertically or is complementary to the products and services in the relevant market.
  • Provide detailed discussions, including multiple diverse examples, of the “raising rivals’ costs” and “foreclosure” theories of harm. In recent decades, these theories of harm have been the principle theories investigated in merger reviews.
  • Identify conditions under which a vertical merger would not require an extensive investigation, because the merger does not create or enhance the merged firm’s incentive or ability to harm rivals.
  • Emphasize that analyzing efficiencies is an important part of reviewing vertical mergers.
  • Explain in detail the analysis of the elimination of double marginalization (“EDM”), which economists emphasize is a frequent procompetitive result of vertical transactions.

The new guidelines are the culmination of a process that dates back to the start of the FTC’s Hearings on Competition and Consumer Protection in the 21st Century in June 2018.  In June 2018, and then again in the October 2018, the Commission sought comment on the legal and economic analysis of vertical mergers, and whether new Vertical Merger Guidelines should be issued by the antitrust agencies.  In November 2018, the Commission held a public hearing to discuss the proper scope of new guidelines. In the spring of 2019, both agencies began working on revisions to the 1984 Non-Horizontal Merger Guidelines, and began sharing drafts of proposed new guidelines in the summer of 2019. On January 10, 2020, the agencies jointly released a draft version of the Vertical Merger Guidelines; the agencies received 74 substantive comments on the draft. A public workshop to discuss the draft was held on March 11, 2020 during which staff from both agencies moderated debate and discussion on the draft Vertical Merger Guidelines. The guidelines released today modify the draft released in January to incorporate comments from the public.

Read the complete release at Department of Justice And Federal Trade Commission Issue New Vertical Merger Guidelines


Review the Vertical Merger Guidelines (PDF)

Vertical_Merger_Guidelines_6-30-20

Additional Reading

Source: ComplexDiscovery

Business as Unusual? Eighteen Observations on eDiscovery Business Confidence in the Summer of 2020

The results of the recent Summer 2020 eDiscovery Business Confidence Survey present the unfortunate and continuing impact of COVID-19 on the business of eDiscovery. However, for these pandemic-driven results to be fully understood, they should be viewed through the contextual lens of the results of all nineteen surveys that have been administered to eDiscovery professionals since the inception of the eDiscovery Business Confidence Survey in early 2016.



Check Out the Observations Now!

ComplexDiscovery combines original industry research with curated expert articles to create an informational resource that helps legal, business, and information technology professionals better understand the business and practice of data discovery and legal discovery.

All contributions are invested to support the development and distribution of ComplexDiscovery content. Contributors can make as many article contributions as they like, but will not be asked to register and pay until their contribution reaches $5.

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