What A Difference A Year Makes: FTC Withdraws Vertical Merger Guidelines

• Published date: 04 December 2021
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, M&A/Private Equity, Corporate and Company Law, Antitrust, EU Competition
• Law Firm: Jones Day
• Author: Mr Ryan Thomas, Aimee DeFilippo and Lauren Miller Forbes

In September 2021, the five-member Federal Trade Commission voted 3-2 along party lines to withdraw its support for the Vertical Merger Guidelines¹ ("Guidelines") and related FTC commentary on vertical merger enforcement.² At the same time'indeed, only hours later on the same day'the acting head of the Antitrust Division of the Department of Justice issued a statement indicating that the Guidelines "remain in place" at the DOJ while the agency conducts a "careful review" of its process for making enforcement decisions.³

What a difference a year makes. The Guidelines had been jointly adopted by the FTC and the DOJ in mid-2020, marking the first revision in more than 35 years and following the DOJ's failed attempt to block AT&T's acquisition of Time Warner.⁴ At that time, Republican leadership at both agencies lauded the new Guidelines. The head of the DOJ's Antitrust Division said the new Guidelines would "give greater predictability and clarity to the business community, the bar, and enforcers." The FTC Chair echoed this sentiment, explaining that the "new guidelines reflect our current enforcement approach and, through increased transparency, will help businesses and practitioners understand how we evaluate vertical transactions."

As the saying goes, elections have consequences. The last two administration changes resulted in repeals of antitrust guidance. The Obama Administration repealed the Bush Administration's monopolization guidance, and the Trump Administration repealed the Obama Administration's guidance on merger remedies. The Biden FTC's repeal of the Vertical Merger Guidelines continues that pattern and builds on a number of personnel announcements and policy decisions by President Biden squarely directed at increasing enforcement of U.S. antitrust laws. Since taking office in January 2021, President Biden has named pro-enforcement leadership to key positions in the White House and at both federal antitrust agencies; he also issued a sweeping executive order instructing federal agencies to promote competition in the American economy.

Within the world of merger enforcement, U.S. enforcement actions historically have been focused most on horizontal transactions'combinations involving direct current or future competitors. The prevailing view had been that these deals were more likely than vertical transactions to raise significant competitive concerns due to the agencies' conclusion that transactions involving parties operating at different levels...