Merger Rules Get Tougher in Crackdown by Antitrust Enforcers

U.S. antitrust agencies stepped up the Biden administration’s crackdown on mergers and acquisitions with a sweeping overhaul of rules the government uses to determine whether deals violate competition law.

The changes come on the heels of several bruising defeats for the government in blocking vertical mergers.

Last week, the Federal Trade Commission lost a legal fight over Microsoft Corp.’s $69 billion deal to buy Activision Blizzard Inc. It was the third big failure for antitrust enforcers, after the Justice Department’s unsuccessful bids to block UnitedHealth Group Inc. from buying up Change Healthcare Inc. last year and AT&T Inc.’s 2018 Time Warner merger.

The 13 new guidelines proposed Wednesday by the Justice Department and FTC are part of an effort to curb the rise of companies that seek to dominate their industries by buying up rivals. The agencies are asking for public comments on the proposal over the next 60 days.

U.S. regulators developed the new guidelines to provide greater transparency to the public and companies about how antitrust enforcers are thinking about the law as markets and industries change, Jonathan Kanter, the DOJ’s top antitrust cop, said in an interview with Bloomberg TV.

“Markets today are very different than they were 50 years ago,” Kanter said. “Those economic shifts, those new realities are necessary to understand to apply the law effectively.”

Under President Joe Biden, the U.S. has doubled down on efforts to block more mergers after decades of a light-touch approach by government. Kanter and FTC Chair Lina Khan have argued previous administrations were too permissive, leading to a rise in corporate concentration that has limited choices for consumers and contributed to higher prices.

Under the proposed guidelines, enforcers said they will examine multiple mergers if a deal is part of a series of acquisitions made by a company within the same market. Agencies also will focus on the impact on workers when a deal involves companies that formerly competed for labor.

Enforcers may assume a deal would harm competition if the company’s market share after the acquisition will be greater than 30%, according to the agencies.

When it challenged the Microsoft deal, the FTC claimed it would allow the company to withhold Activision’s key titles from rival consoles or game services. But a federal judge ruled the government hadn’t proved the acquisition would hurt competition.

The agency is appealing, though a court declined to pause the merger while the FTC seeks to reverse Microsoft’s win. The companies on Wednesday extended their deal deadline to Oct. 18.

13 Proposed Guidelines

Here are the 13 principles outlined in the new guidelines:

1. Mergers should not significantly increase concentration in highly concentrated markets.

2. Mergers should not eliminate substantial competition between firms.

3. Mergers should not increase the risk of coordination.

4. Mergers should not eliminate a potential entrant in a concentrated market.

5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.

6. Vertical mergers should not create market structures that foreclose competition.

7. Mergers should not entrench or extend a dominant position.