Merger Acquisition Newsroom

Horizontal Merger Guidelines

Provides Greater Transparency and Understanding of Agencies’ Use of the Guidelines

The Federal Trade Commission and the U.S. Department of Justice today jointly released a “Commentary on the Horizontal Merger Guidelines” that continues the agencies’ ongoing efforts to increase the transparency of their decision-making processes – in this case, with regard to federal antitrust review of “horizontal” mergers between competing firms.

The analytical framework and standards used to scrutinize the likely competitive effects of such mergers are embodied in the Horizontal Merger Guidelines, which the agencies jointly issued in 1992, and revised, in part, in 1997. The Commentary, which is available now on both agencies’ Web sites, explains how the FTC and DOJ have applied particular Guidelines’ principles, in the context of actual merger investigations.

“The merger review process is highly fact-intensive,” said Deborah Platt Majoras, Chairman of the FTC. “By explaining how we have applied the Guidelines to actual investigations, the Commentary should foster greater public understanding about the review process, and in doing so, help businesses assess the potential antitrust risks they face when evaluating whether to proceed with a transaction.”

The agencies have found that the business community and antitrust law practitioners generally consider the Guidelines’ framework to be effective in yielding the right results in individual merger investigations, and in providing reasonably clear guidance from which they can assess the antitrust risks of mergers that they may be considering. The FTC and DOJ have further observed, however, that business leaders and their counsel would substantially benefit from a more elaborate and detailed articulation of how the agencies and their staff actually incorporate the Guidelines’ framework when analyzing a merger’s likely effect on competition and consumers. The Commentary is the agencies’ response to this important public interest.

For example, the agencies do not settle on a market definition before proceeding to address other issues. Rather, the process of defining the market is directly linked to a competitive effects analysis. As part of the integrated analysis, market definition can help inform competitive effects and competitive effects can help inform market definition. The Commentary points out numerous examples of this integrated approach to Guidelines analysis, in which the agencies’ central focus remains on the likely competitive effects that will result from the merger under review.