Today the Federal Trade Commission (FTC) and the Department of Justice (DOJ) jointly issued their final version of the 2023 Merger Guidelines. Overall, this version is an improvement over the draft released for public comment, but that’s damning with faint praise.
The final guidelines soften the language a bit from the draft’s presumption that mergers are guilty until proven innocent, do away with one rule aimed specifically at vertical mergers and another rule that would have given the agencies carte blanche to challenge any proposed merger. That’s all for the best, but the guidelines remain problematic.
Stricter structural presumptions remain, threating to ensnare too many pro-competitive deals in red tape. The delays, increased compliance costs and abandoned mergers may end up hurting consumer in the form of less innovation, higher prices, and decreased overall efficiencies.
The rules as finalized are likely to deter acquisitions and chill investment in start-ups. That’s bad news for our tenuous economy,
The final guidelines continue to degrade the consumer welfare standard. Antitrust law can only serve one master effectively and consumers will suffer for the sake of lesser competitors and other special interests. The guidelines still largely ignore the advances of the last 40 years of economic analyses and, accordingly, remain rife with citations to outdated case law.
CEI went into detail about the problems contained within the draft guidelines and those concerns mostly apply to this final version:
The draft Guidelines do not sufficiently recognize the motivations for acquisition. Neither do they acknowledge the potential advantages of acquisitions, including the possible benefits for workers or consumers.
Nor do the Guidelines support their assertion that internal “organic growth” is superior or favored by Congress. That bias is a personal preference, not an economic or legal rationale, and should not be forced on others in the economy. More generally, a basic respect for property rights recommends a default of allowing owners to do with their property as they wish, unless a harm can be proven, not just conceived of as a possibility. The Guidelines suggest the opposite presumption in favoring internal growth over acquisition.
Read the whole comment here.