U.S. Antitrust Agencies Finalize New Merger Guidelines Intended to Reinvigorate Merger Enforcement

December 27, 2023

Key Takeaways

The Merger Guidelines lower the market concentration threshold for the presumption that a merger is illegal.
Deals that place combined market shares above 30 percent with a significant increase in concentration are considered presumptively illegal.
The Merger Guidelines also identify concerns with serial acquisitions (e.g., a series of small acquisitions) and partial acquisitions.
Other key changes include a new focus on vertical mergers and mergers that entrench or extend a dominant position, eliminate potential competition, or harm workers.
The Merger Guidelines reflect how DOJ and FTC currently assess mergers during the investigation phase but are not binding on the courts.
Despite fears that the current administration’s new guidelines will lead to increased enforcement, Dechert’s Antitrust Merger Investigation Timing Tracker (DAMITT) shows the agencies have completed fewer significant merger investigations through the first three quarters of 2023 than in any year in DAMITT history going back to 2011.

The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) (collectively, the agencies) issued their new Merger Guidelines on December 18, 2023 (the 2023 Merger Guidelines). The 2023 Merger Guidelines, the culmination of a two-year project for revitalizing merger enforcement, replace both the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines.

The 2023 Merger Guidelines describe how the agencies identify mergers that may violate the federal antitrust laws. They are intended to respond to “modern market realities” and to provide transparency and guidance to the public, business community, practitioners, and courts regarding the “factors and frameworks” the agencies consider when evaluating mergers. Although the 2023 Merger Guidelines are not legally binding, judges have sometimes relied on prior versions in their decision making where consistent with case law.

The agencies’ new guidelines reflect the current administration’s merger enforcement practices. Despite fears that these guidelines would lead to increased merger enforcement, Dechert’s Antitrust Merger Investigation Timing Tracker (DAMITT) shows those fears may not be justified. Through the first three quarters of 2023, the U.S. antitrust agencies completed only eight significant investigations—the fewest of any year in DAMITT history going back to 2011. By comparison, between 2011 and 2022, the agencies completed an average of 19 significant investigations during the first three quarters of each year.

The agencies outline 11 core principles that are referred to as “guidelines.” The table below lists the 11 core guidelines.

Guideline 1	Mergers raise a presumption of Illegality when they significantly increase concentration in a highly concentrated market.
Guideline 2	Mergers can violate the law when they eliminate substantial competition between firms.
Guideline 3	Mergers can violate the law when they increase the risk of coordination.
Guideline 4	Mergers can violate the law when they eliminate a potential entrant in a concentrated market.
Guideline 5	Mergers can violate the law when they create a firm that may limit access to products or services that its rivals use to compete.
Guideline 6	Mergers can violate the law when they entrench or extend a dominant position.
Guideline 7	When an industry undergoes a trend toward consolidation, the agencies consider whether it increases the risk a merger may substantially lessen competition or tend to create a monopoly.
Guideline 8	When a merger is part of a series of multiple transactions, the agencies may examine the whole series.
Guideline 9	When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform.
Guideline 10	When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers, creators, suppliers, or other providers.
Guideline 11	When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition.

Key deviations from the prior 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines include:

Significantly lower post-acquisition market concentration threshold for a presumptively illegal merger. The 2023 Merger Guidelines lower the threshold for a highly concentrated market from a post-merger 2,500 Herfindahl-Hirschman Index (HHI) to 1,800. If the change in the HHI is greater than 100, the merger is considered presumptively illegal. Under this significantly lower market concentration threshold, a merger in a market with six or fewer companies with similar market shares would be presumptively illegal.
New presumption against mergers with a post-acquisition market share of greater than 30 percent. The 2023 Merger Guidelines state that a merger that creates a firm with a market share greater than 30 percent and that significantly increases market concentration (a change in HHI greater than 100) is “presumed to substantially lessen concentration or tend to create a monopoly.” The 1992 and 2020 Horizontal Merger Guidelines did not contain market share presumptions.
Substantial analysis devoted to mergers that eliminate potential competition. The 2023 Merger Guidelines devote significantly more attention than the prior guidelines to mergers that may eliminate “actual potential competition” or “perceived potential competition.”
Actual potential competition. The agencies will analyze both objective and subjective evidence to determine the “reasonable probability” that one or both merging firms would enter the relevant market and whether the new entry would offer a substantial likelihood of de-concentrating the market or other procompetitive effects.
Perceived potential competition. The agencies also expressed concern that the elimination of a perceived potential entrant may lessen competition because “[t]hat pressure can prompt current market participants to make investments, expand output, raise wages, increase product quality, lower product prices, and take other procompetitive actions.” To determine “whether the acquisition of a perceived potential entrant may substantially lessen competition, the Agencies consider whether a current market participant could reasonably consider one of the merging companies to be a potential entrant and whether that potential entrant has a likely influence on existing competition.”
Enhanced enforcement against vertical and other non-horizontal mergers that may enable the merged firm to limit access to products and serves that rivals use to compete. The primary focus of the final vertical guideline is whether the merged firm “can limit access to a product, service, or route to market that its rivals may use to compete.” The revised section toned down the structural presumption of illegality if the share of a related product controlled by the merged firm is greater than 50 percent, although a footnote states that the agencies will “generally infer” a merged firm has monopoly power if its market share of the related product is greater than 50 percent. A firm with less than a 50 percent of a related product may still be illegal when the “related product is important to its trading partners.” A related product is “any product, service, or route to market that rivals use to compete in that market[.]”
Concerns with a merger that could entrench or extend a dominant position. The 2023 Merger Guidelines are concerned with any merger that entrenches or extends a dominant position in a market “through exclusionary conduct, weakening competitive constraints, or otherwise harming the competitive process.” An example of entrenching a dominant position is where a dominant firm acquires a nascent competitive threat, which is “a firm that could grow into a significant rival, facilitate other rivals’ growth, or otherwise lead to a reduction in its power.” An example of extending a dominant position into another market is where the merger “might lead the merged firm to leverage its position by tying, bundling, conditioning, or otherwise linking sales of two products.”
Serial or roll-up acquisitions, rather than a single acquisition, may be anticompetitive. The 2023 Merger Guidelines identify concerns with “[a] firm that engages in an anticompetitive pattern or strategy of multiple acquisitions in the same or related business lines[.]” The agencies are concerned with “a cumulative series of mergers” and “will consider individual acquisitions in light of the cumulative effect of related patterns or business strategies.”
Labor markets and workers may be adversely impacted by mergers. Labor market issues were not addressed in prior versions of the Merger Guidelines. The 2023 Merger Guidelines are concerned with mergers that may reduce competition between firms that compete for the same workers. A reduction in competition for specific groups of workers (i.e., a reduction in labor market competition) “may lower wages or slow wage growth, worsen benefits or working conditions, or result in other degradations of workplace quality.”
Partial/minority ownership may raise significant competitive concerns. The 2023 Merger Guidelines note that “[p]artial acquisitions that do not result in control may nevertheless present significant competitive concerns.” Partial acquisitions can lessen competition by “giving the partial owner the ability to influence the competitive conduct of the target firm,” by “reducing the incentive of the acquiring firm to compete,” or by “giving the acquiring firm access to non-public, competitively sensitive information from the target firm.”
Efficiencies/rebuttal evidence. The 2023 Merger Guidelines limit rebuttal evidence to a narrow focus on failing firms, entry or repositioning that is timely likely, and sufficient, and in-market cognizable efficiencies that “could not be achieved without the merger under review.”

The impact of the 2023 Merger Guidelines on courts remains to be seen. Although the 2023 Merger Guidelines extensively cites to older U.S. Supreme Court and appellate court decisions from many decades ago, it does not address many of the recent losses by the DOJ and FTC, including United States v. United States Sugar Corp., United States v. United HealthGroup, Inc., United States v. Booz Allen Hamilton Holdings Corp., FTC v. Meta Platforms, Inc., and FTC v. Microsoft Corp. Inconsistencies between this case law and the 2023 Merger Guidelines likely will be resolved in favor of the case law.