Recently, the FTC released for comment the proposed revisions to the 1992 Horizontal Merger Guidelines (the “Proposed Revisions“).  Coming just a day before the beginning of the ABA Antitrust Law Spring Meeting, the release of the Proposed Revisions was sure to spark a great deal of discussion at the Spring Meeting as lawyers and economists began to digest the document.  Fortunately for those who attended the Spring Meeting, they were not disappointed, as there was much discussion both in and out of the conferences about this topic.

Certainly, the Proposed Revisions offer to make important changes to the Merger Guidelines.  For example, product market definition would not necessarily be a determinative consideration.  “Market definition is not an end in itself:  it is one of the tools the Agencies use to assess whether a merger is likely to lessen competition.”  Proposed Revisions, p. 7.  The Proposed Revisions though would apply a more expansive description of the definition of the “hypothetical monopolist” test used in determining product markets.  In addition, the threshold numbers for the Herfindahl-Hirschman Index (”HHI”) would be increased (see Part 5.3) but would not be considered as necessarily providing a safe harbor.  Also, a section would be added addressing “powerful buyers” (see Part 8).  Here again, according to the revisions, the presence of so-called “power buyers” would not be determinative:  “[T]he Agencies do not presume that the presence of powerful buyers alone forestalls adverse competitive effects flowing from the merger.”  Proposed Revisions, p. 27.  Finally, the two year guidance for market entry – formerly a central touchstone in merger cases — has been eliminated (see Part 9).

Interestingly, though, the Proposed Revisions are not viewed by some as a dramatic change from the existing Merger Guidelines.  Commenting on the Proposed Revisions at the Spring Meeting, Deputy Assistant Attorney General for Civil Enforcement, Molly S. Boast, stated that the revisions were intended to bring the Merger Guidelines in line with current practice at the Agencies when reviewing mergers. Others might disagree.  In any event, what is apparent, is that the Proposed Revisions suggest a shift away from “guidelines” to “indicators.”  This appears to have been a conscious move to provide the agencies more flexibility in how they consider a merger.

“These Guidelines should be read with the awareness that merger analysis does not consist of uniform application of a single methodology.  Rather, it is a fact-specific process through which the Agencies, guided by their extensive experience, apply a range of analytical tools to the reasonably available and reliable evidence to evaluate competitive concerns in a limited period of time.” Proposed Revisions, pp. 1-2.

In the next several weeks, antitrust practitioners will be chiming in on the Proposed Revisions.  While formal comments may result in some changes around the edges, it should be expected that the Proposed Revisions will largely remain intact.  Attention will then be focused on what role the Merger Guidelines, as revised, will play in discussions with the Agencies and in court battles over contested mergers.