FTC Chair Khan Gives a Look Behind the Curtain of United States Merger Reform

In remarks given final week at the 2022 International Competition Network Conference in Berlin, Germany, FTC Chair Lina Khan gave a keynote handle by which she described the “broad and sweeping reassessment” of United States competitors legislation. Unsurprisingly, a lot of the focus of Chair Khan’s remarks centered on the a lot-anticipated and -watched revision of the merger tips presently being undertaken by the FTC and the Antitrust Division of the Department of Justice. In simply 4 pages of ready remarks, Chair Khan supplied a vital peek into the place the businesses appear to be heading.

Chair Khan characterised as a “goal of paramount significance” to make sure that the merger frameworks mirror “contemporary commercial realities.” She asserted that prior tips froze in place financial and descriptive theories about markets that must be revised to “fit new facts and evidence” in order that the “tools be dynamic and holistic rather than static and atomistic.”

The second key aim Chair Khan recognized is making certain that the tips are devoted to the statutory normal that “merger enforcement is intended to stop, in its incipiency, trends toward concentration.” The Chair promised “to fully hew to the law, including by applying the incipiency standard and examining whether a deal ‘may tend to create a monopoly.’’ She indicated that the agencies were considering greater reliance on strong presumptions beyond what the current guidelines provide and identifying additional factors that “may be predictive of future harms, including direct evidence of competitive effect and industry trends and patterns of consolidation.”

Chair Khan then turned to a few substantive areas which can be explicit areas of focus — digital markets, labor markets, and non-horizontal mergers.

With respect to digital markets, the Chair pointed to sure options —“including zero-price dynamics, the competitive significance of data, and the network externalities that can swiftly lead markets to tip.”

Reflecting the Biden administration’s emphasis on antitrust enforcement in labor markets, Chair Khan quoted U.S. Department of Treasury estimates that lack of competitors could also be costing staff as much as 20% of their wages.

Turning to the non-horizontal mergers, the place most observers count on an uptick in enforcement efforts, Chair Khan recognized the have to sharpen the businesses’ insights. Harking again to enforcement actions in the Sixties and Nineteen Seventies, she indicated that the businesses should look at “a range of strategies and effects, including extension strategies and portfolio effects” that will warrant enforcement motion.”

The Chair referenced the 1000’s of feedback the businesses acquired, in addition to the collection of listening periods they’ve performed concerning the merger tips. She reiterated that she hoped the businesses would have a ultimate doc by the finish of the yr.

When the businesses launched their merger assessment course of, we instructed that the businesses had a fairly good thought of the place the revision was heading. While the Chair’s remarks lacked the element that the ultimate doc will include, this “peek” reinforces the sturdy notion that the revised tips can be broader, deeper, and extra hostile to extra mergers than the tips they’ll change. What stays to be seen is whether or not the underlying rationale and proof justifying the enlargement and modifications can be convincing to the courts in order that the new tips can be given the weight that the present tips obtain.

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