- Revised Horizontal Merger Guidelines Released
- September 2, 2010 | Author: John E. McCann
- Law Firm: Miles & Stockbridge P.C. - Baltimore Office
On August 19, 2010, the United States Department of Justice (“DOJ”) and the United States Federal Trade Commission (“FTC”) (the “Agencies”) released revised Horizontal Merger Guidelines (the “Guidelines”). The 2010 Guidelines provide businesses considering horizontal mergers with a greater understanding of how the Agencies evaluate such transactions.
The much-anticipated revisions to the Guidelines are the outcome of a year-long project jointly initiated by both Agencies in September of 2009. As part of the project, the Agencies held a number of public workshops and considered public comments from the antitrust bar, economists, consumer groups, and businesses. The resulting 2010 Guidelines mark the first major revision to the Guidelines since 1992, and are now available online at www.justice.gov/atr/public/guidelines/hmg-2010.html.
Like their predecessor, the 2010 Guidelines outline the principal analytical techniques, practices and enforcement policy that the Agencies use to evaluate the competitive effects of horizontal mergers. Emphasizing that merger analysis is a “fact-specific process,” the new Guidelines are “intended to assist the business community and antitrust practitioners by increasing the transparency of the analytical process underlying the Agencies’ enforcement decisions.” Toward that end, the agencies sought “to identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that are either competitively beneficial or neutral.”
The 2010 Guidelines differ from the old 1992 Guidelines in several major respects. For example, they:
- Include a new section on “Evidence of Adverse Competitive Effects” that details the categories and sources of evidence that the Agencies use to determine the likely competitive effects of a proposed merger;
- Explain that market definition is not an end in and of itself, or a necessary starting point of merger analysis, and that market concentration is a useful tool only if it informs the merger’s likely competitive effects;
- Provide a more detailed explanation of the “hypothetical monopolist” test used to define relevant markets;
- Update market concentration thresholds under the Herfindahl-Hirschman Index used to determine whether the proposed merger warrants scrutiny by the Agencies;
- Include a more expansive discussion of how the Agencies evaluate unilateral competitive effects, and an updated section on coordinated effects; and
- Add new sections explaining how the Agencies will analyze the potential impact of “powerful buyers” in mergers between competing buyers; and partial acquisitions.
In general, the 2010 Guidelines reflect the Agencies’ increased emphasis on the likely competitive effects of a merger, and less reliance on the analytical nuances of market definition. As with the prior Guidelines, the 2010 Guidelines apply to acquisitions and mergers of all sizes, even those that fall below the mandatory reporting requirements of the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). This is particularly relevant in light of a recent study showing that, since 2008, the Agencies have scrutinized an increasing number of smaller transactions that fall below the HSR Act reporting threshold. Thus, businesses contemplating a significant merger or acquisition, even one that falls below HSR Act reporting requirements, should be careful to consider the competitive effects of their proposed transaction under the new 2010 Guidelines.