New Merger Guidelines Quietly Reshape the Business Landscape

It just got much harder for companies to buy up their competitors.

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This week, the Antitrust Division at the Department of Justice and the Federal Trade Commission released the final version of the new Merger Guidelines, first announced earlier this summer.

The legal document amounts to a new corporate charter for American commerce that sends a clear message: In order to grow, companies will have to focus on investing in product, innovation, and job quality instead of relying on acquiring competitors through mergers and acquisitions. It is a significant accomplishment for antitrust regulators that restores their ability to enforce the laws as originally intended by Congress, which had been hemmed in by previous versions of the guidelines.

In a statement, the American Economic Liberties Project’s research manager Erik Peinert lauded the guidelines. “The finalized merger guidelines are a game-changer for antitrust enforcement, incorporating decades of new learnings and thousands of public comments from working families and small businesses,” he wrote.

It’s the first paradigm shift in mergers since the 1982 guidelines set by the Reagan administration that relaxed enforcement against corporate mergers.

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Specifically, the guidelines outline several new categories of anti-competitive harms that hadn’t previously been a primary focus of antitrust reviews. Those include vertical mergers where a firm acquires companies that are not direct head-to-head competitors in order to integrate operations across multiple lines of business. Vertical integration in health care, for example, has been a common practice where insurers, hospitals, and pharmacies are all owned by the same conglomerate.

The guidelines also empower enforcers to block a series of acquisitions—such as when hedge funds roll up an entire market sector with a series of purchases—and review the serial deals in total rather than one at a time.

Of particular note is a section that says enforcers should review harms to workers as potential grounds for disrupting a merger, which is new territory for antitrust. Among the most common practices after a merger, after all, are mass layoffs or wage cuts. Notably on this front, numerous unions, including the Teamsters and United Food and Commercial Workers, submitted public comments praising the proposed draft merger guidelines for their attention to worker impacts from consolidation.

Another section of the guidelines specifically restricts merger deals when the outcome could block off even a potential entrant into a concentrated market. That could cover certain deals such as Meta’s purchase of VR studio Within that the FTC failed to block earlier this year in court.

Certain antitrust groups, including the Open Markets Institute, had urged regulators to go a step further to strengthen the guidelines as first proposed. In a public comment, Open Markets, joined by numerous civil society groups, recommended lowering the structural presumption threshold that triggers merger enforcement. OMI suggested that a 15 percent market share held by the combined firm would be sufficient to block the deal instead of the proposed 30 percent. The final merger guidelines maintain the threshold at greater than 30 percent.

“The thresholds would capture only the most problematic mergers in the most concentrated markets and would fail to include mergers in markets that are trending toward concentration or borderline cases that could raise red flags,” the letter said.

The release of the guidelines caps a series of victories over the past few days for the antitrust authorities.

After a long protracted fight, the Federal Trade Commission won a case this week to stop biotech company Illumina, which specializes in gene-sequencing technology, from acquiring Grail, a cancer test maker. The FTC argued the combination of the two firms would hurt competition in cancer diagnostics and increase price. The Fifth Circuit ruled in favor of the FTC, which forced Illumina to then decide to divest from Grail.

On the heels of that decision, Adobe also announced that it would back off its proposed deal to take over Figma, a direct competitor in the design software market. The company cited the Antitrust Division of the DOJ as one of the reasons why it stepped away, as well as mounting pressure from regulators in the U.K. and EU.

Antitrust enforcers now have a record of victories to boast about going into the new year. More may be coming.

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