The following statement can be attributed to Paul Lekas, Senior Vice President, Global Public Policy and Morten Skroejer, Senior Director for Technology Competition Policy, Software & Information Industry Association.
The Department of Justice (DOJ) and the Federal Trade Commission (FTC) yesterday published new proposed guidelines for horizontal and vertical mergers. The proposal represents a radical shift in how the two enforcement agencies aim to evaluate mergers. We are concerned that the proposed guidelines will create confusion, unpredictability, and diverge from years of jurisprudence, with a significant negative effect on the business of information and the U.S. innovation environment.
We agree with the White House that “[c]ompetition is imperative to the functioning of product, service, and labor markets.” It is in this spirit that the proposed guidelines’ departure from the lodestar of antitrust enforcement – consumer welfare – in favor of an untested mix of factors, including “thirteen principles that the agencies may use when determining whether a merger is unlawfully anticompetitive under the antitrust laws” marks a venture into the unknown that will undoubtedly have negative effects on consumers and businesses alike.
Indeed, the approach outlined by the FTC and DOJ appears to disregard decades of judicial precedent and, in proposing an approach to regulate “the modern economy,” draws selectively from case law, predominantly from the 1960s and 1970s.
The credibility of the merger guidelines will ultimately rest on the courts’ willingness to view them as a well-balanced explanation of existing law and attendant agency practice, rather than a political exercise. Courts are not bound by the merger guidelines, and we are concerned they will look with skepticism on a wholesale revision that disregards decades of precedent.
It seems odd that the DOJ and the FTC would double down on an enforcement strategy that, to date, has very little to show for it. Just last week, the FTC was told by a federal judge that its last-minute attempt to block a high-profile merger had no chance of success. Add to this, these proposed changes in merger enforcement come directly on the heels of another proposal that would substantially change the premerger notification regime.
Periodic reviews of the efficacy of agency policies is prudent. But to the extent that merger enforcement has been lacking, a dubious proposition, there is no reason to think that revising the merger guidelines would change that. And this is to say nothing of the impact that bad merger guidance is likely to have on the economy more broadly. The DOJ and the FTC would do well to heed the old adage that changing too much at once rarely ends well.