The Biden administration is pushing forward with new merger enforcement guidelines even as antitrust enforcers have been dealt a series of losses in court that may call into question whether their aggressive approach can withstand judicial scrutiny.
This tension was on display at a Tuesday event staged by the Federal Trade Commission and the Department of Justice featuring several antitrust experts, some of whom were critical of the Biden administration’s approach to merger enforcement.
Barry Nigro, a former Trump administration antitrust enforcer and partner at law firm Fried Frank argued in a panel discussion that the new guidelines pay insufficient attention to recent court decisions that call into question the government’s newfound skepticism of so-called vertical mergers wherein two companies at different points in a product supply chain seek to merge.
A recent example is Microsoft Corp.’s
MSFT,
planned $75 billion acquisition of video game maker Activision Blizzard Inc.
ATVI,
which the FTC sought to block, arguing in court that the deal would reduce competition in the gaming industry. A federal appeals court denied the FTC’s attempt to block the deal in July, and the agency is considering whether to drop its opposition altogether.
Nigro argued that the FTC’s failure to block the deal as well as another high-profile loss in a case against Facebook parent Meta Platforms Inc.
META,
suggests that the courts are not buying the Biden administration’s reinterpretation of antitrust law.
He also argued the guidelines fail to describe what sort of mergers would be acceptable in the eyes of the FTC and DOJ, a failure if the point of these guidelines is “to make sure anticompetitive mergers don’t make it out of the boardroom.”
The criticism dovetails with others made after the guidelines were released with some observers arguing that document was more about messaging than policy.
Robert Kaminsky, an analyst with Capital Alpha Partners labeled the guidelines a “political exercise” that will be less relevant to the courts than previous iterations.
“In the increasingly politicized arena of antitrust enforcement, merger guidelines
issued on a party-line vote at the FTC will be more susceptible to reversal by a future administration than a consensus document,” he wrote in July. “The swinging pendulum of merger guidelines will then become less useful for companies’ long-term planning and less influential on the judiciary.”
The FTC and DOJ are soliciting public comments on the guidelines through Sept. 18, after which they will begin the process of finalizing the framework, which is meant to educate the courts and the public on how enforcers interpret antitrust law.
Owen Tedford of Beacon Policy Advisors argued in a Tuesday note to clients that losses in court already are forcing FTC Chair Lina Khan and DOJ antitrust head Jonathan Kanter to be more inclined to strike deals with companies seeking to merge, accepting pledges to not engage in anticompetitive behavior as a condition for approving mergers.
“In the last month alone, the FTC settled two antitrust cases, and the DOJ decided not to pursue a challenge against Thoma Bravo’s acquisition of ForgeRock,” Tedford wrote. “This track record does not seem to fit with how [antitrust enforcers] have portrayed themselves, but it acknowledges the hurdles they face. Instead of blocking deals outright, Khan and Kanter take wins where they can.”
Despite evidence of a more conciliatory approach, he argued that one should still expect Biden antitrust enforcers to engage in “tough talk” that advertises opposition to big mergers.
“However,” Tedford wrote, “the regulators are now less intimidating than at the start of their term as their track records in court suggest that Khan and Kanter’s collective bark is worse than their bite.”
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