As global corporate legal professionals may be well aware, the Federal Trade Commission (FTC) and Department of Justice (DOJ) hosted the first of three planned workshops on September 5, 2023, aiming to “facilitate public dialogue” regarding the 2023 FTC and DOJ Draft Merger Guidelines. The full details can be gathered here.
Published in July 2023, the draft guidelines proposed by the agencies featured an augmented focus on structural presumptions and promoted expansive as well as novel theories of merger enforcement. If accepted, the guidelines would essentially formalize the Agencies’ approach towards their enforcement activities, marking a significant shift in the current landscape.
According to Hogan Lovells, the law firm offering insight into the proposed guidelines, the incorporation of structural presumptions is an interesting development. Structural presumptions, used as a preliminary filter, suggest a merger’s anti-competitive censoriousness based chiefly on market concentration post-merger. Until now, these presumptions have often been applied employees with a broader, more nuanced analysis of the competitive effects of a merger.
However, these draft guidelines seem to elevate the standing of these presumptions. If the guidelines are enacted in their present state, it could lead to potentially more scrutinized reviews conducted by the FTC and DOJ on future mergers, based on whether they violate the newly implemented structural presumptions. Therefore, the guidelines could represent a deeper commitment on part of the agencies to stifle any potential for decreased competition in the respective markets.
The second important aspect is the promotion of expansive and novel enforcement theories. It implies that the agencies intend to continue broadening the scope of their enforcement activities. Particularly, they aspire to combat anti-competitive behaviour that may not get detected by traditional legal practices. This proactive approach can have considerable implications for corporations planning to partake in any mergers or acquisitions in the future.
Given these potential developments, legal consultants and teams may want to carefully evaluate future merger strategies to ensure they meet the possible new standards, and vigilantly watch for the finalization of these draft guidelines.