Randy Picker provides his round-two comments on the draft Merger Guidelines.
It seems a bit odd to ask, as I want to do here, what is it exactly that the new draft Merger Guidelines are trying to do? In my first-round post, I suggested that the Guidelines were intended to provide guidance to private parties considering a possible merger and then, perhaps, secondarily to offer a roadmap to courts in considering cases. I want to consider a third possible purpose, namely, influencing the public at large.
The draft Guidelines are substantively quite different from their predecessors, a point of perhaps universal agreement in first-round comments. But the Guidelines are also stylistically quite different than their predecessors, and that is seen most directly in the extensive citation of case law in the new Guidelines. As Dennis Carlton notes in his first-round piece, the 2010 Guidelines cite no cases, but that wasn’t a new feature of those Guidelines. The 1982 Merger Guidelines are seen by some in the symposium (see Eleanor Fox and Zephyr Teachout) as a distinctive break from the 1968 Guidelines, but on the question of case law citation, the 1968 Guidelines and the 1982 Guidelines were in perfect sync: neither cited a single case. What should we make of the dramatic stylistic change in the current draft Guidelines? Is style just style or is style substance? What is the relationship between form and function?
The Guidelines are a joint product of the Federal Trade Commission and the Antitrust Division of the Department of Justice. As is typically the case, both the chair of the FTC and the head of the Antitrust Division are from the same political party, as each is nominated by the president subject to Senate approval. (To be accurate, but perhaps a little technical, Lina Khan was nominated to be an FTC commissioner by the president, approved by the Senate, and subsequently appointed by the president as chair of the FTC, as that appointment didn’t require Senate approval.) But the FTC is a political agency in the sense that no more than three of the five commissioners can be from the same political party, and it usually operates on a 3-2 basis.
When the draft Guidelines were released—and this is still true today—the FTC had only three sitting commissioners, all Democrats. Some FTC decisions are unanimous, but many follow straight party lines, but, even in those cases, I assume that internal and external dissent matters and that internal dissent from opposing commissioners is missing here. But at a recent event held at the Centre for Economic Policy Research, Aviv Nevo, the current director of the Bureau of Economics at the FTC offered his view on how we should understand the drafting of the new Guidelines. In the process, he echoed some of the criticisms made about how the Guidelines present the case law and appear to prioritize law over economics:
Now, starting with the law in principle is a good idea. I think it really lays out clearly the path, from law to economics to implementation. In practice, you know, I have to be honest and say it’s hard to achieve. And therefore created, I think, somewhat of a distraction. I therefore, urge you, as you read the Guidelines to not get stuck in the legal discussion and look beyond, there’s a lot of really good stuff, once you get beyond the legal discussion.
And so there’s a lot of good stuff. And just to be clear here, the discussion of the law is a good one to have. But putting it in the Guidelines creates a distraction and doesn’t let us really dive into a lot of a lot of (sic) the good stuff that’s there.
Nevo is an economist, but his views read like those in a friendly dissenting opinion. He urges readers to sidestep the law “distraction” to find the “good stuff” beyond the extensive case law citations. Nevo’s views are particularly interesting since we don’t have actual dissenting opinions on the draft Guidelines from Republican FTC commissioners.
So why the case law? Start with firms that might consider a merger. There seems to be little doubt that the FTC and DOJ would like to see a reduction in the number of mergers. The FTC took an early step in that direction in August 2021 when it announced that it simply didn’t have the resources to process all of the mergers it was facing in the timeframes contemplated by the Hart-Scott-Rodino pre-merger notification process. The FTC instead was going to send merging parties what it described as a “pre-consummation warning letter” to let them know that the FTC hadn’t blessed the merger and would feel free to challenge it after the fact. The whole point of Hart-Scott-Rodino’s regime was to sort potential problems before a merger took place, given the difficulties of, as everyone put it, unscrambling the eggs after the fact, but the FTC was walking away from that process. The FTC clearly wanted to shift how it was using resources plus the approach would create a kind of uncertainty tax on mergers with, one presumes, the hope that doing so would reduce the willingness of parties to propose mergers.
We should view the draft Merger Guidelines through a similar lens. One way to reduce the number of mergers is to litigate cases to block mergers directly but doing that is time consuming and expensive and the results, as the FTC’s losses in Meta/Within and Microsoft/Activision show, are far from certain. It would be easier, per the FTC and DOJ, if firms just stopped merging, so a document, like the draft Merger Guidelines, that makes it look like it is hard to merge would work to their goal. The suggestion that the case law is against your merger—especially cases from the Supreme Court—might push a few firms away from merging.
Then there is the public at large. It was inconceivable that non-professionals would have read the 1968 or 1982 guidelines, as they wouldn’t have likely encountered them or had a clue how to get them. That of course wasn’t true of the 2010 guidelines, but antitrust didn’t have the political salience then that it does now. Today, with devices always at the ready and content only a click away with clicks rapidly distributed over social media, it is quite plausible that interested members of the public might at least skim the Guidelines. Business owners also might read the Guidelines, though individuals doing mergers of the scale captured in the Hart-Scott-Rodino process will almost certainly have lawyers helping them through the process.
The Guidelines may be another input into a larger agenda and engaging with the broader public may be part of a process of building support for that agenda. That sounds like less an exercise in what the law currently is, but more about what the law might become. Think of litigated and lost cases as inputs into a broader political agenda for antitrust reform. There were real efforts to pass new antitrust legislation in the last Congress and legislative reform efforts have so far been more successful in Europe, where the Digital Market Act is just starting to go live. In that framework, the point of the draft Guidelines might be an effort to educate the public, where extensive citations to case law might make the new Guidelines seem much less like a policy choice and more of an implementation of well-established case law implementing the underlying statutes. A complete version of that approach would seem to require a full-treatment of the existing case law, a point raised in a number of first-round comments (see, for example, Herb Hovenkamp), but a brief to the public might be effective as persuasion without being comprehensive or fully balanced.
In his first-round comment, Carlton suggested that the draft Guidelines would be improved “if the final draft deleted the introductory legal discussion, as well as the draft Guidelines copious citations to cases in the remainder of the document.” It is hard to look at the draft Guidelines and imagine that that is going to happen. As Nevo’s recent comments seem to make clear, this must have been the subject of real discussion in the process, even with the FTC hobbled with only three commissioners in place. The draft Guidelines are an effort to break from the past and not just from 2010 or 1982 but even the 1968 Guidelines. Nevo believes that there is “good stuff” beyond the law in the current draft Guidelines, and the Guidelines will have to play out for us to assess that, but the case law citation may be its own point and the consequences of that will almost certainly be subtle with perhaps a few mergers never proposed and perhaps more support for broader antitrust reform.
Author Disclosure: Randy Picker is not currently working or consulting for any party with a financial interest in the Merger Guidelines.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.