Federal antitrust enforcers recently released draft guidelines for evaluating anti-competitive mergers, signaling a heightened focus on digital markets. The proposed rules, put forth by the Justice Department and Federal Trade Commission, call for a broad examination of mergers involving online platforms. While the guidelines do not specifically mention tech giants like Amazon, Meta (formerly Facebook), or Google, they have implications for their merger and business strategies.
The aim of the updated guidelines is to reflect the realities of how firms operate in the modern economy, according to FTC Chair Lina Khan. One key aspect of the rules is the emphasis on “multi-sided” platforms, which refer to online companies that offer various products or services that can benefit from each other’s participation. This includes companies like Amazon, which operates a platform and sells its own products, such as Amazon Basics.
The draft rules also expand the evaluation of large digital companies that may acquire smaller competitors to solidify their market dominance. The FTC previously sued Meta (then Facebook) on similar grounds, accusing the company of buying Instagram and WhatsApp to eliminate potential competition. The litigation in that case is still ongoing.
Although the guidelines are nonbinding and do not alter existing law, they will serve as a framework for antitrust enforcers during their investigations of proposed mergers. The public has until September 18th to submit comments on the proposal before the agencies finalize the rules.
According to Assistant Attorney General for Antitrust Jonathan Kanter, these updates are necessary to adapt law enforcement tools to the evolving commercial landscape and ensure competition is protected in today’s modern economy. The original merger guidelines were published in 1968 and have been revised multiple times since. The FTC, under President Biden, decided to revoke the 2020 vertical merger guidance established during the Trump administration, citing flawed economic theory.
Traditionally, antitrust enforcers have taken a lenient approach to vertical mergers, which involve combining companies operating along different parts of the same supply chain. However, the new draft rules suggest that some vertical mergers could be detrimental to consumers. This shift indicates a potential change in approach from the long-standing consumer welfare standard, which primarily focused on price impacts. The response from the courts regarding this strategy shift remains uncertain. Recently, Republican members of the House Judiciary Committee accused FTC Chair Lina Khan of bringing losing cases to pressure Congress into amending antitrust laws.
The tech industry and trade groups have already criticized the proposal for singling out digital platforms, expressing concerns that it could force American companies to move their operations overseas. Matt Schruers, the president of the Computer and Communications Industry Association, argued that creating regulations specific to certain companies does not make legal or economic sense.
Progressives, on the other hand, have supported similar changes to antitrust regulations. Senator Elizabeth Warren commended the Biden administration’s action, stating that it is welcome news for American small businesses, workers, and consumers who stand to benefit from increased competition.
In conclusion, the release of the draft guidelines for evaluating anti-competitive mergers by federal antitrust enforcers reflects a sharpened focus on digital markets. The rules address the complexities of the modern economy and underscore the need to adapt law enforcement tools to protect competition. While the proposed guidelines do not explicitly target tech giants, they have significant implications for their merger and business strategies. However, the response from the tech industry and trade groups has been critical, raising concerns about the potential impact on American businesses. As the public submits feedback on the proposal, it remains to be seen how the final rules will shape the future of antitrust regulation in the digital age.
