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LJN NewslettersNewsSectionsThe Corporate Counselor

The New DOJ/FTC Horizontal Merger Guidelines

BY Michael A. Salinger
January 28, 2011

Last August, the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued revisions to their joint Horizontal Merger Guidelines (HMG). The new HMG represent a substantial departure from the old HMG, and they change in important ways how companies seeking merger clearance (or seeking to influence merger clearance for deals involving suppliers, competitors, or customers) should make their presentations to the agencies. At the risk of over-generalizing, a standard approach to getting merger clearance under the old HMG was to argue that the proposed merger would do no competitive harm. Under the new HMG, merging companies should consider doing more to make the affirmative case for the merger; and doing so might involve greater involvement by those involved in planning for the merger might be necessary.

Background

For those not familiar with merger review, some basic background might help. Section 7 of the Clayton Antitrust Act makes it illegal for one company to acquire another, or for two companies to merge, if the effect “may be substantially to lessen competition, or to tend to create a monopoly.” When it was passed, merger challenges occurred only after the merger had been consummated. That changed in 1974. Because of the difficulty of “unscrambling the eggs,” Congress enacted the Hart-Scott-Rodino Act, which provided for pre-merger antitrust review. The Antitrust Division of the DOJ and the FTC share responsibility for merger review in most industries.

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