Eyes Wide Open: There Are No Blinders In Merger Reviews

By: Tara Isa Koslov & Heather M. Johnson (FTC)

The FTC’s Bureau of Competition sometimes reviews proposed mergers against the backdrop of civil and criminal antitrust investigations or litigations leveled in the same industry. And at times, such investigations and litigations are leveled against the merger parties themselves. Those ongoing matters may affect our analysis of a merger, as well as the vetting of divestiture packages and proposed divestiture buyers. Even if details of such investigations are not public, Bureau staff are likely to discover their existence during our own investigation of a merger.

To be clear: an ongoing government or private antitrust probe involving the companies or the industry does not necessarily signal that a merger is anticompetitive. Still, such probes may be relevant to the Bureau’s analysis of the merger. Concurrent investigations or litigations regarding party conduct may undermine parties’ arguments about the adequacy of the number of players in the market, the possibility of tacit coordination, or a party’s market position or lack of monopoly power. While the Bureau does not take as proven an allegation that one of the parties has violated the antitrust laws, we cannot ignore such allegations, either.

In particular, companies and individuals facing criminal probes or civil antitrust claims alleging collusion or coordinated behavior are likely to face additional scrutiny during their merger review. Section 7.2 of the Horizontal Merger Guidelines makes it clear that “[t]he Agencies presume that market conditions are conducive to coordinated interaction if firms representing a substantial share in the relevant market appear to have previously engaged in express collusion.” This approach is consistent with caselaw finding unlawful, in the absence of special circumstances, an acquisition that reduces the number of significant sellers in a market already highly concentrated and prone to collusion based on history and circumstances…

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