If at first you don’t succeed… try putting it in writing. The Justice Department and the Federal Trade Commission proposed new antitrust merger guidelines this week, solidifying their tough stance on corporate consolidation. President Biden pushed for the update in a 2021 exec order aimed at curbing the power of big businesses. The guidelines outline which types of mergers deserve extra scrutiny. Like:
Killer acquisitions: when companies buy rivals to squash future competition. In 2020, the FTC sued Meta to force it to divest from Instagram and WhatsApp, which it said were acquired in a “buy-or-bury scheme” to maintain social superiority.
Data dominance: mergers that give platform businesses (like Apple’s App Store and Amazon’s ecomm store) control over data streams that could help them eclipse rivals.
Worker woes: acquisitions that could harm workers by reducing competition and wages (the DOJ’s lawsuit against the Penguin Random House merger with Simon & Schuster addressed the deal’s potential to harm author pay).
Big swings = lotsa strikeouts… The Biden admin’s ambitious antitrust strategy has led to some notable losses in court for regulators. Last week, an appeals court squashed the FTC’s latest attempt to block Microsoft’s $69B purchase of Activision Blizzard. And earlier this year the agency failed to stop Meta’s acquisition of VR company Within Unlimited. With this more aggressive approach under Biden, antitrust agencies have won just 30% of their merger cases (compared to a 65% win rate between 2001 and 2020).
Losses can have silver linings… Despite some legal L’s for regulators, forceful regulation has given corporate boards a reason to think twice about snatching up companies. It could also provide a pathway for future regulator wins. In each antitrust suit, new merger case law is established by courts, which the DOJ and FTC could use as a blueprint.