FTC, DOJ Aim for Joint M&A Guidelines Update in 2022

Their agencies hope to issue joint takeover guidelines this year, DOJ Antitrust Division Chief Jonathan Kanter announced with FTC Chair Lina Khan Tuesday. The rise in mergers and acquisitions has been a key driver in consolidation, including in tech, and the M&A guidelines should reflect modern challenges, they told a livestreamed news conference.

The commission withdrew from its 2020 joint vertical transaction guidelines with DOJ in September (see 2109150061), but the document remains in place at the department. Public input from a variety of stakeholders will be “critical” for issuing a new document, Khan said. “We hope to finish this year, but we have a lot of work to do along the way,” said Kanter.

Khan highlighted a few areas, asking if the guidelines are “unduly limited in their focus” and if certain markets deserve a better framework to assess market power. She questioned whether the guidelines properly address a wide range of business decisions and strategies that drive acquisitions and how the guidelines are used to analyze deals that create monopolies.

DOJ shares the FTC’s “substantive” concerns about the guidelines, which overstate potential benefits and fail to properly identify harms, said Kanter. Market “realities” should drive the guidelines, not just market definitions, which aren’t the “most reliable tool,” said Kanter. The FTC faces market definition hurdles in its antitrust case against Facebook (see 2201110071).

Comments are due March 21. They will issue draft guidelines and open a second round of comments, said Kanter. Khan is awaiting the Senate to confirm nominee Alvaro Bedoya as commissioner (see 2201070058), which would restore her Democratic majority.

Senate Commerce Committee Chair Maria Cantwell, D-Wash., told us she’s working to schedule a Bedoya vote: “We’ve got a few more people we’ve got to talk to -- where they are with him -- on our side. You’ve got to make sure everybody is good if we have to go it alone” without Republican support.

Kanter and Khan deferred to staff during Q&A. DOJ attorney David Lawrence was asked why Justice didn’t withdraw from the guidelines. DOJ and the FTC are two different agencies with different systems and procedures, Lawrence said. He noted the 1984 vertical M&A document was on the books for at least 35 years without the FTC joining: It’s not new for one agency to adhere to separate guidelines.

The previous guidelines led to under-investigation in digital and labor markets, said FTC top economist John Kwoka. He cited zero-price business models and data aggregation as matters “not fully addressed” in the previous guidelines. Agency enforcement has become increasingly focused on labor market issues, and the guidelines should reflect that, said FTC attorney Kenneth Merber.

Lawrence was asked what market definition updates could mean for future investigations and cases. That’s one of the topics in the request for information, he said: “I don’t have an answer.”

The previous guidelines direct attention to consumer price outcomes, said Kwoka: That lens could be “unduly narrow,” as agencies now must consider quality and innovation issues, not just price.

Senate Intelligence Committee Chairman Mark Warner, D-Va., welcomed the review: “With the increasing concentration of power in the hands of a small group of companies, acquisition has become the only exit strategy for most startups, as the built-in advantages are too great to overcome.”

“A strong startup economy is key to our nation’s future,” said TechNet CEO Linda Moore. “By making it harder for startups to be acquired by U.S. companies, jobs will be lost, our economy will be weakened, and our foreign competitors strengthened.”