Do the New FTC/DOJ Vertical Merger Guidelines Provide Clarity?
On June 30, 2020, the Federal Trade Commission (“FTC”) and U.S. Department of Justice (“DOJ”) released final Vertical Merger Guidelines. As noted previously, the agencies had issued draft guidelines that were subject to public comment. The release of the final guidelines comes amid congressional pressure for increased scrutiny of vertical mergers.
The FTC and DOJ emphasized that the final guidelines, although only 12 pages long, provide transparency, predictability, and clarity into the investigatory processes of the agencies with regard to vertical mergers. Of particular note, the agencies removed the “safety zone” they had included in the draft guidelines (where they had stated that the agencies would be unlikely to challenge a vertical merger when the parties to the merger have a share in the relevant market of less than 20 percent, and the related product is used in less than 20 percent of the relevant market). The agencies do note (in terms of market evaluation) the following:
The [FTC and DOJ] use the methodology set out in Section 5 of the Horizontal Merger Guidelines to measure shares and concentration in a relevant market, but do not rely on the thresholds in Section 5.3 as screens for or indicators of competitive effects from vertical theories of harm. Existing levels of concentration may nonetheless be relevant.
As a result, it will still be important to review relevant case law related to vertical mergers in order to obtain full clarity on the issue.