Merger guidelines: Difference between revisions
Content deleted Content added
→History of the Merger guidelines: fix horizontal merger guidelines reference (to actual rather than earlier for-comment release) |
m improve short description (via WP:JWB) |
||
| (30 intermediate revisions by 25 users not shown) | |||
| Line 1: | Line 1: | ||
{{Short description|U.S. competition rules}} |
|||
{{Competition law}} |
{{Competition law}} |
||
{{For|EU guidelines on the assessment of horizontal mergers|European Union merger law}} |
|||
'''Merger guidelines''' in the United States are a set of internal rules promulgated by the [[United States Department of Justice Antitrust Division|Antitrust Division]] of the [[United States Department of Justice|Department of Justice]] (DOJ) in conjunction with the [[Federal Trade Commission]] (FTC). These rules have been revised over the past four decades. They govern the process by which these two regulatory bodies scrutinize and/or challenge a potential [[Mergers and acquisitions|merger]]. Grounds for challenges include increased [[market concentration]] and threat to [[competition]] within a [[relevant market]]. |
|||
The merger guidelines have sections governing both [[horizontal integration]] and [[vertical integration]]. |
The merger guidelines have sections governing both [[horizontal integration]] and [[vertical integration]]. |
||
==History |
==History == |
||
The first merger guidelines set forth by the DOJ were the 1968 Merger Guidelines |
The first merger guidelines set forth by the DOJ were the 1968 Merger Guidelines.<ref>{{Cite web|url=https://www.justice.gov/archives/atr/1968-merger-guidelines|title=1968 Merger Guidelines|date=2015-06-25|website=www.justice.gov|language=en|access-date=2019-07-13}}</ref> The guidelines were developed by former [[United States Assistant Attorney General|U.S. Assistant Attorney General]] Dr. [[Donald F. Turner|Donald Turner]], an [[economist]] and lawyer with expertise in the field of [[industrial organization]].<ref name="Williamson">[http://www.usdoj.gov/atr/hmerger/11257.htm Oliver E. Williamson, The Merger Guidelines of the U.S. Department of Justice-In Perspective]. Accessed November 4, 2007.</ref> |
||
These merger guidelines were criticized in some quarters for excess concern with issues of market structure such as [[barriers to entry]] and [[concentration ratio]]s at the expense of efficiency and [[economies of scale]].<ref name="James">[http://www.usdoj.gov/atr/hmerger/11253.htm Remarks of Assistant Attorney General Charles A. James].</ref> They were, however, a step forward in two ways: they gave more accurate advice to corporate management as to when and how mergers would be examined and brought new economic ideas into antitrust enforcement, specifically the [[Structure-conduct-performance paradigm|"structure-conduct-performance" model]] of [[industrial organization]].<ref name="Williamson" /> |
|||
| ⚫ | |||
| ⚫ | They remained largely unchanged until 1982 when [[United States Associate Attorney General|Associate Attorney General]] Bill Baxter, under the authority of [[United States Attorney General|U.S. Attorney General]] [[William French Smith]], released a new set of guidelines, which made heavier use of modern concepts of [[Microeconomics|microeconomic theory]], including using the [[Herfindahl index]] to measure [[market concentration]].<ref>[https://web.archive.org/web/20121021080907/http://www.time.com/time/magazine/article/0,9171,949508-2,00.html Time magazine, "Guidelines for the Merger Thicket", June 28, 1982]. Accessed September 12, 2007.</ref> The newer guidelines took a more favorable view of [[economies of scale]] and efficiency of production as rationales for integration.<ref name="Williamson" /> Moreover, they raised the level of market concentration necessary for the government to scrutinize mergers, effectively treating competition as a means to greater efficiency rather than as an independent goal.<ref>[http://www.usdoj.gov/atr/hmerger/11254.htm William J. Kolasky and Andrew R. Dick, The Merger Guidelines and the Integration of Efficiencies into Antitrust Review of Horizontal Mergers, 10 June 2002]. Accessed September 12, 2007.</ref> This approach was controversial: some antitrust lawyers saw it as a loosening of previous restraints on corporate consolidation, and some [[State Attorney General|State Attorneys General]] responded to Baxter's changes by tightening merger enforcement at the state level.<ref name="James" /> |
||
| ⚫ | The guidelines were revised again in 1984.<ref>[http://www.usdoj.gov/atr/hmerger/11249.htm 1984 Merger Guidelines]</ref> |
||
| ⚫ | The guidelines were revised again in 1984.<ref>[http://www.usdoj.gov/atr/hmerger/11249.htm 1984 Merger Guidelines]</ref> The only portion of the 1984 guidelines that remains in effect is [http://www.usdoj.gov/atr/public/guidelines/2614.htm Section Four], which governs the examination of market effects of [[vertical integration]]. These guidelines were replaced by the 1992 Merger Guidelines,<ref>[http://www.usdoj.gov/atr/hmerger/11250.htm 1992 Merger Guidelines]</ref> which fine-tuned previously established tools and policies, such as the [[SSNIP test]] and rules governing the acquisition of failing firms.<ref>Joshua R. Wueller, [https://ssrn.com/abstract=2293412 ''Mergers of Majors: Applying the Failing Firm Doctrine in the Recorded Music Industry''], 7 Brook. J. Corp. Fin. & Com. L. 589, 591–92 (2013) (describing section 11 of the 2010 Guidelines (and section 5.1 of the earlier 1997 Guidelines), which governs the failing firm doctrine for the FTC and DOJ).</ref> The 1992 Guidelines were revised in 1997, almost concurrently with the FTC's challenge of the [[Staples Inc.|Staples]]-[[Office Depot]] merger in federal court. |
||
The 1997 Horizontal Merger Guidelines were replaced with a revised version in 2010. This version was released on August 19, 2010<ref name="2010 Merger Guidelines">[http://ftc.gov/os/2010/08/100819hmg.pdf 2010 Horizontal Merger Guidelines]</ref>. |
|||
The 1997 Horizontal Merger Guidelines were replaced on August 19, 2010.<ref name="2010 Merger Guidelines">[http://ftc.gov/os/2010/08/100819hmg.pdf 2010 Horizontal Merger Guidelines]</ref> These guidelines introduced the concept of "upward pricing pressure" resulting from a merger between competing firms. The 2010 revisions, while deemed by some to be an improvement,<ref>Judd E. Stone & Joshua D. Wright, ''The Sound of One Hand Clapping: The 2010 Merger Guidelines and the Challenge of Judicial Adoption'', 39 REV. IND. ORGAN. 145 (2011).</ref> attracted criticism from [[law and economics]] scholars who contend that they do not update efficiencies analysis,<ref>''Id.''</ref> that they may not be recognized by the courts<ref>Leah Brannon & Kathleen Bradish, ''The Revised Horizontal Merger Guidelines: Can the Courts Be Persuaded?'', THE ANTITRUST SOURCE, October 2010, at 4.</ref> and that they do not embody principles that reflect dynamic competition.<ref>''See'' J. Gregory Sidak & David J. Teece, ''Rewriting the Horizontal Merger Guidelines in the Name of Dynamic Competition'', 16 GEO. MASON L. REV. 885 (2009), https://www.criterioneconomics.com/docs/rewriting-horizontal-merger.pdf.</ref> |
|||
==Notes== |
==Notes== |
||
| Line 30: | Line 34: | ||
**[http://ftc.gov/os/2010/08/100819hmg.pdf ''2010 Horizontal Merger Guidelines''] |
**[http://ftc.gov/os/2010/08/100819hmg.pdf ''2010 Horizontal Merger Guidelines''] |
||
*[http://www.usdoj.gov/atr/public/guidelines/215247.htm Official DOJ commentary on the horizontal merger guidelines] |
*[http://www.usdoj.gov/atr/public/guidelines/215247.htm Official DOJ commentary on the horizontal merger guidelines] |
||
*[http://www.usdoj.gov/atr/hmerger.htm 20th anniversary of the 1982 merger guidelines] |
*[https://web.archive.org/web/20070807065051/http://www.usdoj.gov/atr/hmerger.htm 20th anniversary of the 1982 merger guidelines] |
||
*[http://www.ftc.gov/speeches/other/dvperumerg.shtm FTC International antitrust coordinator Debra Valentine] |
*[https://web.archive.org/web/20070608100536/http://www.ftc.gov/speeches/other/dvperumerg.shtm FTC International antitrust coordinator Debra Valentine] |
||
[[Category:Mergers and acquisitions]] |
[[Category:Mergers and acquisitions]] |
||
[[Category:United States antitrust law]] |
[[Category:United States antitrust law]] |
||
{{US-law-stub}} |
|||
Latest revision as of 20:01, 25 June 2022
| Competition law |
|---|
 |
| Basic concepts |
| Anti-competitive practices |
|
| Enforcement authorities and organizations |
Merger guidelines in the United States are a set of internal rules promulgated by the Antitrust Division of the Department of Justice (DOJ) in conjunction with the Federal Trade Commission (FTC). These rules have been revised over the past four decades. They govern the process by which these two regulatory bodies scrutinize and/or challenge a potential merger. Grounds for challenges include increased market concentration and threat to competition within a relevant market.
The merger guidelines have sections governing both horizontal integration and vertical integration.
History
[edit]The first merger guidelines set forth by the DOJ were the 1968 Merger Guidelines.[1] The guidelines were developed by former U.S. Assistant Attorney General Dr. Donald Turner, an economist and lawyer with expertise in the field of industrial organization.[2]
These merger guidelines were criticized in some quarters for excess concern with issues of market structure such as barriers to entry and concentration ratios at the expense of efficiency and economies of scale.[3] They were, however, a step forward in two ways: they gave more accurate advice to corporate management as to when and how mergers would be examined and brought new economic ideas into antitrust enforcement, specifically the "structure-conduct-performance" model of industrial organization.[2]
They remained largely unchanged until 1982 when Associate Attorney General Bill Baxter, under the authority of U.S. Attorney General William French Smith, released a new set of guidelines, which made heavier use of modern concepts of microeconomic theory, including using the Herfindahl index to measure market concentration.[4] The newer guidelines took a more favorable view of economies of scale and efficiency of production as rationales for integration.[2] Moreover, they raised the level of market concentration necessary for the government to scrutinize mergers, effectively treating competition as a means to greater efficiency rather than as an independent goal.[5] This approach was controversial: some antitrust lawyers saw it as a loosening of previous restraints on corporate consolidation, and some State Attorneys General responded to Baxter's changes by tightening merger enforcement at the state level.[3]
The guidelines were revised again in 1984.[6] The only portion of the 1984 guidelines that remains in effect is Section Four, which governs the examination of market effects of vertical integration. These guidelines were replaced by the 1992 Merger Guidelines,[7] which fine-tuned previously established tools and policies, such as the SSNIP test and rules governing the acquisition of failing firms.[8] The 1992 Guidelines were revised in 1997, almost concurrently with the FTC's challenge of the Staples-Office Depot merger in federal court.
The 1997 Horizontal Merger Guidelines were replaced on August 19, 2010.[9] These guidelines introduced the concept of "upward pricing pressure" resulting from a merger between competing firms. The 2010 revisions, while deemed by some to be an improvement,[10] attracted criticism from law and economics scholars who contend that they do not update efficiencies analysis,[11] that they may not be recognized by the courts[12] and that they do not embody principles that reflect dynamic competition.[13]
Notes
[edit]- ^ "1968 Merger Guidelines". www.justice.gov. 2015-06-25. Retrieved 2019-07-13.
- ^ a b c Oliver E. Williamson, The Merger Guidelines of the U.S. Department of Justice-In Perspective. Accessed November 4, 2007.
- ^ a b Remarks of Assistant Attorney General Charles A. James.
- ^ Time magazine, "Guidelines for the Merger Thicket", June 28, 1982. Accessed September 12, 2007.
- ^ William J. Kolasky and Andrew R. Dick, The Merger Guidelines and the Integration of Efficiencies into Antitrust Review of Horizontal Mergers, 10 June 2002. Accessed September 12, 2007.
- ^ 1984 Merger Guidelines
- ^ 1992 Merger Guidelines
- ^ Joshua R. Wueller, Mergers of Majors: Applying the Failing Firm Doctrine in the Recorded Music Industry, 7 Brook. J. Corp. Fin. & Com. L. 589, 591–92 (2013) (describing section 11 of the 2010 Guidelines (and section 5.1 of the earlier 1997 Guidelines), which governs the failing firm doctrine for the FTC and DOJ).
- ^ 2010 Horizontal Merger Guidelines
- ^ Judd E. Stone & Joshua D. Wright, The Sound of One Hand Clapping: The 2010 Merger Guidelines and the Challenge of Judicial Adoption, 39 REV. IND. ORGAN. 145 (2011).
- ^ Id.
- ^ Leah Brannon & Kathleen Bradish, The Revised Horizontal Merger Guidelines: Can the Courts Be Persuaded?, THE ANTITRUST SOURCE, October 2010, at 4.
- ^ See J. Gregory Sidak & David J. Teece, Rewriting the Horizontal Merger Guidelines in the Name of Dynamic Competition, 16 GEO. MASON L. REV. 885 (2009), https://www.criterioneconomics.com/docs/rewriting-horizontal-merger.pdf.