The Federal Trade Commission (FTC) and the Justice Department jointly issued the 2023 Merger Guidelines, which describe factors and frameworks the agencies utilize when reviewing mergers and acquisitions.
These Merger Guidelines identify the procedures and enforcement practices the Department of Justice and the Federal Trade Commission most often use to investigate whether mergers violate the antitrust laws.
“Fair, open, competitive markets have been essential to America’s dynamic, thriving economy, and policing unlawful mergers is our front line of defense against harmful corporate consolidation,” said FTC Chair Lina M. Khan.
“The 2023 Merger Guidelines reflect the new realities of how firms do business in the modern economy and ensure fidelity to statutory text and precedent. I am grateful for the thousands of comments submitted by American workers, consumers, entrepreneurs, farmers, business owners, and other members of the public. This input directly informed the guidelines and allowed us to pursue this work with a deeper understanding of the real-life stakes of merger enforcement,” Khan added.
Attorney General Merrick B. Garland states, “These finalized Guidelines provide transparency into how the Justice Department is protecting the American people from the ways in which unlawful, anticompetitive practices manifest themselves in our modern economy.”
Meanwhile, the Los Angeles Times reported that Kroger and Albertsons are bracing for a possible FTC lawsuit over the proposed merger of the two grocery retail giants.
According to the Los Angeles Times, the FTC would have until Jan. 17, 2024, to rule on Kroger’s acquisition of Albertsons. The deadline was disclosed in a court filing in a class action lawsuit brought by consumers opposing the deal.
The merger of the country’s two largest supermarket chains, a $24.6 billion transaction, would create a 4,500-store mega-chain.
NGA Applauds Power-Buyer Scrutiny in New Merger Guidelines
The National Grocers Association (NGA) announced its support for the new merger guidelines presented by the FTC and the Department of Justice. The NGA said the new guidelines reflect a significant shift because they strongly consider how buyer power impacts competition amongst rival firms and trading partners. This is a significant contrast to the current guidelines that largely ignore how buyer power abuses impact competition.
These updates signify a notable departure in merger enforcement, reflecting an effort to address concerns raised by the NGA with federal enforcers.
In September 2023, comments submitted to the FTC and DOJ on the proposed guidelines, the NGA emphasized the need for agencies to scrutinize how dominant firms utilize their bargaining leverage to impose discriminatory terms on their rivals. NGA highlighted the substantial advantage enjoyed by dominant food retailers, who can exert pressure on grocery suppliers to secure more favorable terms, encompassing pricing, promotions, payment terms, and product availability.
“Following decades of consolidation, the current grocery landscape is dominated by a few national chains who wield so much economic influence they can undercut competitors simply by demanding preferable treatment from suppliers. This pattern has resulted in anticompetitive economic discrimination against independent grocers and their customer base,” said Chris Jones, Senior Vice President of Government Relations and Counsel at NGA. “The revised Merger Guidelines signifies a major course correction in antitrust enforcement that recognizes the competitive dangers of buyer power.”
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The 2023 Merger Guidelines modify the draft Merger Guidelines released on July 19, 2023, to address comments from the public, including extensive engagement from attorneys, economists, academics, enforcers, and other policymakers at the agencies’ three Merger Guidelines Workshops.
They emphasize the dynamic and complex nature of competition, ranging from price competition to competition for the terms and conditions of employment to platform competition.
This approach enables the agencies to assess the commercial realities of the United States’ modern economy when making enforcement decisions. It ensures that merger enforcement protects competition in all its forms.
The agencies protect competition by enforcing antitrust laws and other federal competition statutes. Since 1968, the agencies have issued merger guidelines to enhance transparency and promote awareness of how the agencies undertake merger analysis before deciding whether or not to challenge an acquisition.
Over the years, the agencies have worked collaboratively to update the merger guidelines periodically to reflect changes in the law and market realities, including in 1982, 1984, 1992, 1997, 2010, and 2020.
Like the prior horizontal and vertical merger guidelines they replaced, the 2023 Merger Guidelines are not legally binding but provide transparency into the Agencies’ decision-making process.
The 2023 Merger Guidelines do not predetermine enforcement action by the agencies. Although the Merger Guidelines identify the factors and frameworks the agencies consider when investigating mergers, the agencies’ enforcement decisions will necessarily depend on the facts in any case and will continue to require prosecutorial discretion and judgment.
The Commission vote to approve the 2023 Merger Guidelines was 3-0.