Biden Administration Finalizes Sweeping Overhaul of Merger Rules

WASHINGTON — The Justice Department and Federal Trade Commission on Monday released a new set of proposed rules aimed at cracking down on mergers and acquisitions that eliminate competition in the marketplace.

The new guidelines, which President Joe Biden announced at a meeting of the White House Competition Council this morning, are designed to prevent companies from gaining unrestrained dominance in their respective industries by buying up rivals.

“Anti-competitive mergers can hurt people and drive up costs as well,” Biden said during remarks at the start of the meeting. “For example, hospital mergers have led to price increases of 20% or more … and health insurance mergers have caused premiums to go up 7% on average.

“All told, this kind of industry concentration costs the typical American household an estimated $5,000 a year,” the president continued.

“We cannot accept bad mergers that lead to mass layoffs, higher prices, and fewer options for workers and consumers,” Biden said. “As I’ve said before, capitalism without competition isn’t capitalism; it’s exploitation.”

The 13 new guidelines published Monday in the Federal Register are largely similar to the draft proposal the administration published in July.

The biggest difference is that the final version does not include a proposed guideline related to so-called vertical deals — those between companies that aren’t direct competitors but operate in the same supply chain.

According to the two agencies, “the guidelines seek to give the public, businesses, workers and consumers clarity about how law enforcement agencies evaluate mergers under the antitrust laws on the books in the context of our modern economy.”

The announcement from the White House also cites a new issue brief from the Council of Economic Advisers that says revised guidance reflects “an approach to antitrust enforcement that is informed by the best, most up-to-date economic evidence available.” 

“Competitive markets and economic opportunity go hand in hand,” said Assistant Attorney General Jonathan Kanter.

“As markets and commercial realities change, it is vital that we adapt our law enforcement tools to keep pace so that we can protect competition in a manner that reflects the intricacies of our modern economy,” said Kanter, who is with the department’s Antitrust Division.

“Simply put, competition today looks different than it did 50 — or even 15 — years ago.”

The new guidelines are essentially the yard sticks the agencies will use when determining whether a merger is unlawfully anti-competitive under the antitrust laws. 

These guidelines are not mutually exclusive, and a given merger may implicate multiple guidelines, the agency said.

The 13 guidelines are:

• Mergers should not significantly increase concentration in highly concentrated markets.
• Mergers should not eliminate substantial competition between firms.
• Mergers should not increase the risk of coordination. 
• Mergers should not eliminate a potential entrant in a concentrated market.
• Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.
• Vertical mergers should not create market structures that foreclose competition.
• Mergers should not entrench or extend a dominant position.
• Mergers should not further a trend toward concentration.
• When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series.
• When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform or to displace a platform.
• When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers.
• When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition.
• Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

The agencies note that they have amended the government’s merger guidelines several times since the first iteration of rules was released in 1968, including in 1982, 1984, 1992, 1997, 2010 and 2020.

In January 2022, the agencies announced a broad initiative to evaluate potential updates and revisions to the Horizontal Merger Guidelines, issued in 2010, and the Vertical Merger Guidelines issued in 2020.

Following a public comment period, which included a request for information, more than 5,000 members of the public — including consumers, workers, state attorneys general, academics, businesses, trade associations, practitioners and entrepreneurs — contributed feedback. 

The agencies also conducted four listening sessions that highlighted the potential for mergers and acquisitions to undermine open, vibrant and competitive markets in industries ranging from food and agriculture to health care.

The two agencies are now encouraging the public to review the draft and provide feedback through a public comment period that will last 60 days.

The public is invited to provide comments to the new guidelines at www.regulations.gov/docket/FTC-2023-0043 for a period of 60 days. The deadline is Sept. 18. 

The agencies said they will use the public comments to evaluate and update the draft before finalizing the guidelines. For a detailed fact sheet on the draft guidelines, please visit www.justice.gov/atr/d9/2023-draft-merger-guidelines.

“President Biden and his administration are taking action to lower costs for hard-working Americans, including by promoting competition,” said National Economic Advisor Lael Brainard.

“For too long, unchecked consolidation has meant big corporations getting bigger, giving them the power to raise prices for Americans and provide consumers with fewer options,” Brainard continued. 

“Today’s release of the 2023 Merger Guidelines by the Department of Justice and Federal Trade Commission is an important step to lower costs for consumers, ensure a level playing field for small businesses, and ensure antitrust enforcement is fit for purpose in today’s economy,” Brainard concluded.

Dan can be reached at [email protected] and @DanMcCue