U.S. Antitrust Agencies Finalize Changes to the U.S. Merger Guidelines – Formalizing a Shift Toward a Very Aggressive Merger Enforcement Policy

On December 18, 2023, the Department of Justice ("DOJ") and Federal Trade Commission ("FTC") published in final form the long-awaited 2023 Merger Guidelines. The final 2023 Merger Guidelines adopt—with some significant changes—the draft Guidelines released by the agencies in July 2023. The final 2023 Merger Guidelines adopted 11 of the 13 draft Guidelines, formalizing the notable shift toward more aggressive merger control enforcement.

We attach a redline of the final December 2023 Merger Guidelines against the July 2023 draft.¹

The U.S. agencies' 2023 Merger Guidelines usher in a shift toward structuralism, making mergers combining firms of more than 30% market share presumptively illegal. The new Merger Guidelines emphasize market shares over economics, signaling a shift back to 1960s policies.

Key Differences in the 2023 Merger Guidelines from the July 2023 draft Guidelines

• Final 2023 Merger Guidelines drop the July 2023 draft's then-Guideline 6, which directly addressed vertical mergers

  • The July 2023 draft Guidelines in then-Guideline 6 had identified mergers that result in a foreclosure share above 50% in a related market or those below a 50% foreclosure share that exhibit certain "plus factors" as "a sufficient basis to conclude that the effect of the merger may be to substantially lessen competition."
  • The final 2023 Merger Guidelines do not include this same language. Importantly, however, the final 2023 Merger Guidelines still address vertical mergers. Final 2023 Guideline 5 warns that vertical transactions that would give merging parties the ability and incentive to weaken or exclude rivals can violate the law.

• Final 2023 Merger Guidelines drop the July 2023 draft's then-Guideline 13, which contained broad catchall language

  • The final 2023 Merger Guidelines also drop the draft's then-Guideline 13 ("Mergers Should Not Otherwise Substantially Lessen Competition or Tend to Create a Monopoly"). This proposal had merely clarified that scenarios addressed in the other guidelines are "not exhaustive" of the mergers that may threaten competition. The DOJ's and FTC's decision to cut this proposal does not reflect a significant change from the July 2023 draft Merger Guidelines.

• Final 2023 Merger Guidelines drop some restrictions on efficiencies from July 2023 draft Guidelines

  • The final 2023 Merger Guidelines drop some restrictions on procompetitive efficiencies that had been included in Section 3.3 of the July 2023 draft Guidelines ("efficiencies are not cognizable if they will accelerate a trend toward concentration [] or vertical integration."). The final 2023 Merger Guidelines still set a high bar for the DOJ and FTC to credit efficiencies.

The 2023 Merger Guidelines are a Significant Change from the 2010 Horizontal and 2020 Vertical Merger Guidelines

• Structural presumption in July 2023 draft Guidelines is unchanged

  • The final 2023 Merger Guidelines detail that a merger will be presumptively unlawful if it has a post-merger Herfindahl-Hirschmann Index ("HHI") of 1,800, and an increase in HHI of 100 from pre-merger levels. These levels are significantly lower than the HHIs established in the 2010 Merger Guidelines (2,500 and 200, respectively). This will result in DOJ and FTC findings of presumptively unlawful merger concentration levels at lower market shares.
  • The final 2023 Merger Guidelines preserve the July 2023 draft Guidelines' tectonic shift towards forbidding mergers that create more than 30% market share – returning U.S. merger policy to the 1960s. The final 2023 U.S. Merger Guidelines revert to the U.S. Supreme Court's 1963 decision in United States v. Philadelphia National Bank, even though many economists and U.S. federal courts have rebuked the 30% figure over the past 60 years.
• Implications for digital markets, monopsony and labor markets, private equity sponsors and institutional investors, and "dominant" firms discussed in our July 2023 analysis: U.S. Antitrust Agencies Propose Sweeping Changes to Merger Guidelines – 5 Key Things You Need to Know² still apply to the final 2023 Merger Guidelines.

_{1 Click here to download a PDF redline highlighting key changes between the final 2023 Merger Guidelines and the July 2023 draft Guidelines. Click here to download a PDF redline comparing the full texts.
2 White & Case, U.S. Antitrust Agencies Propose Sweeping Changes to Merger Guidelines – 5 Key Things You Need to Know, July 20, 2023.}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

_{© 2023 White & Case LLP}