FTC and Department of Justice propose 13 guidelines to dictate M&A deals

The Federal Trade Commission and Department of Justice are proposing 13 guidelines to dictate merger reviews in healthcare and other industries, feds announced Wednesday.

Both agencies said their goal is to better reflect how they work to determine a deal’s impact on competition in today’s market. The proposal comes more than a year after a public inquiry seeking ways to modernize merger guidelines and better detect anticompetitive actions.

“With these draft merger guidelines, we are updating our enforcement manual to reflect the realities of how firms do business in the modern economy,” FTC Chair Lina M. Khan said in a July 19 announcement. “Informed by thousands of public comments—spanning healthcare workers, farmers, patient advocates, musicians and entrepreneurs—these guidelines contain critical updates while ensuring fidelity to the mandate Congress has given us and the legal precedent on the books.”

The guidelines are molded based on feedback from more than 5,000 members of the public who responded to the original request for information in January 2022. Both agencies also held four listening sessions, exploring how M&A deals can potentially undermine the market in healthcare and other industries.

Here is a quick rundown of the 13 principles agencies will use when deducing whether a deal is “unlawfully competitive”:

1. Mergers should not significantly increase concentration in highly concentrated markets. 
2. Mergers should not eliminate substantial competition between firms. 
3. Mergers should not increase the risk of coordination. 
4. Mergers should not eliminate a potential entrant in a concentrated market.
5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.
6. Vertical mergers should not create market structures that foreclose competition. 
7. Mergers should not entrench or extend a dominant position.
8. Mergers should not further a trend toward concentration.
9. When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series.
10. When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform.
11. When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers.
12. When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition.
13. Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

The FTC and DOJ said they previously updated these guidelines in 2020, 2010, 1997, 1992, 1984 and 1982. They’re inviting the public to provide comment on the draft guidelines with a deadline of September 18. Federal officials also recently announced plans to revise the premerger form companies must fill out ahead of any deal-making.