Reed Smith Client Alerts

Recently, vertical mergers have been a hot topic in antitrust law, as evidenced by the number of large proposed vertical transactions that have undergone extreme antitrust scrutiny. For the first time since 1984, the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) have released draft 2020 Vertical Merger Guidelines (Guidelines), which are open for public comment until February 26, 2020. The Guidelines describe how DOJ and FTC evaluate whether a proposed merger between companies that operate at different levels in the same supply chain violates the U.S. antitrust laws.
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As the federal agencies responsible for antitrust enforcement, DOJ and FTC issue and revise guidelines from time to time (including the companion 2010 Horizontal Merger Guidelines), which set forth the agencies' experience, analytical techniques, practices, and enforcement policy. Such guidelines are intended to assist the business community and antitrust practitioners by increasing the transparency of the agencies' enforcement policy and decisions, including when they are likely to challenge (or not challenge) a particular merger.

More specifically, the Vertical Merger Guidelines describe potential anticompetitive effects resulting from vertical mergers, including both unilateral and coordinated effects. Unilateral effects include the diminished competition that results when a merged firm raises its rivals' costs by charging a higher price for related products or refuses to supply rivals with the related products altogether. Coordinated effects may include the diminished competition that results from post-merger coordinated interaction among firms.