Reed Smith In-depth

On July 19, 2023, the Federal Trade Commission and Antitrust Division of the Department of Justice (collectively, the Agencies) jointly released a draft update of the Merger Guidelines (Draft Guidelines) for public comment. These proposed Draft Guidelines describe the Agencies’ review process of potential mergers to determine compliance with federal antitrust laws. Released on the heels of pressure from the White House, the Draft Guidelines reflect how the Agencies consider the competitive effect of mergers given today’s economic realities and developments in conditions since the Horizontal Merger Guidelines and Vertical Merger Guidelines were last updated in 2010 and 2020, respectively. Rather than providing independent guidelines for horizontal and vertical mergers, the Agencies consolidated their guidance and enforcement priorities into one package, which contains 13 principles that the Agencies may use when determining whether a merger is unlawfully anticompetitive.


The proposed Draft Guidelines highlight characteristics of certain mergers that the Agencies will more heavily scrutinize, such as mergers that increase the risk of coordination or involve partial ownership or minority interests. Consistent with the policies of the Agencies under the Biden administration, the Draft Guidelines signal increased review and enforcement actions of mergers in the Big Tech, private equity, and labor markets. While not explicitly singled out, many of the above principles are particularly relevant to big tech and private equity, such as mergers involving digital markets and platforms, serial acquisitions by allegedly dominate firms, and mergers in already concentrated markets. The Draft Guidelines call special attention to the labor market, with a specific emphasis on whether a reduction in labor market competition lowers wages or worsens employee working conditions. Though designed to transform competition enforcement, we also see the Draft Guidelines as an opportunity to engage in an open dialogue with the Agencies regarding potential procompetitive justifications for mergers that might not have been possible under prior guidelines.

It is important to note that these Draft Guidelines are not yet final; over the next 60 days, the Agencies will solicit comments from the public. Reed Smith is here to help you consider and prepare those comments. Please do not hesitate to reach out to our global antitrust and competition team, or the Reed Smith lawyer with whom you regularly work.

Thirteen principles:

1. Mergers should not significantly increase concentration in highly concentrated markets.
Concentration refers to the number and relative size of rivals competing to offer a product or service to a group of customers. The Agencies examine whether a merger between competitors would significantly increase concentration and result in a highly concentrated market. If so, the Agencies presume that a merger may substantially lessen competition based on market structure alone. The Agencies measure concentration levels using the Herfindahl-Hirschman Index (HHI) whereby the higher the index, the more concentrated a market, and the larger the change in the index due to the merger, the more likely it might be to cause harm. In 2010, the Agencies increased the HHI thresholds at which they would consider a market “highly concentrated” as well as what change in the index driven by the merger would be cause for concern, effectively allowing more mergers to proceed. The revised Draft Guidelines restore both values to the pre-2010 lower threshold levels, signaling that fewer mergers will survive scrutiny by the Agencies.