Looking Ahead to Tougher Merger Guidelines and Enforcement

By: Michael W. Scarborough & Skyler Hicks (Sheppard Mullin)

Although the number of corporate mergers surged during President Biden’s first year in office, all signs point to a tougher regulatory environment for deals going forward.

In 2021, $5.8 trillion changed hands as a result of corporate mergers across the globe. This 64 percent increase over 2020 far surpassed the previous annual record, and now the Biden Administration appears to be taking steps toward fulfilling the President’s goal of ramping up antitrust enforcement.  One such measure includes taking a more critical approach when evaluating proposed mergers, and federal agencies have already filed several high-profile investigations.

On January 18, the Federal Trade Commission and the U.S. Department of Justice’s Antitrust Division jointly announced plans to “modernize federal merger guidelines to better detect and prevent illegal, anticompetitive deals.”  These are expected to overhaul both the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines, presumably in a unified set of new guidelines.

The FTC and DOJ joint press release noted that “many industries across the economy are becoming more concentrated and less competitive” and this new rulemaking effort seeks to modernize current guidelines to better reflect evolving markets. Instead of relying solely on traditional antitrust metrics such as consumer prices, the new guidelines appear poised to adopt additional assessment criteria that take into account factors such as a merger’s impact on privacy or how even low-priced marketplaces can exercise monopoly power…

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