The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) have issued draft guidelines concerning the application of U.S. antitrust laws to merger investigations. This represents a significant shift in policy direction, calling into question decades of legal precedent on merger enforcement.
Significantly, the draft guidelines propose an abandonment of competitive effects analyses, which has been a longstanding tool in the review of mergers and acquisitions. Traditionally, these analyses have been utilized to gauge whether a merger would have the net effect of enhancing competition or creating a monopoly. Such metrics have generally been applied to try to forecast and measure the likely impact on consumers and markets.
Instead, the new draft guidelines suggest a re-emphasis on structural presumptions. These presumptions, based on market concentration metrics, have been seen by some as a simpler and more clear-cut method for assessing the potential anticompetitive consequences of a merger.
The implications of these new proposed guidelines are profound. For legal professionals tasked with guiding and advising businesses through the process of mergers and acquisitions, these changes represent a significant departure from previous practices and expectations. Furthermore, corporations who are in the process of planning and executing mergers may also need to re-evaluate their strategies, given this seismic shift in enforcement philosophy.
For more information on this issue, check Latham & Watkins LLP’s insights into the proposed guidelines.