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FTC rescinds vertical merger guidelines, raises concerns


Rescinding guidelines raises concerns

While FTC Chair Lina Khan said the 2020 guidelines took some positive steps toward updating the FTC’s approach to merger reviews, they suffered from “serious deficiencies.”

The current guidelines are “improperly suggesting that efficiencies, or pro-competitive effects, may rescue an otherwise unlawful transaction,” Khan said during the meeting.

Khan said the FTC will work with the DOJ to pursue a comprehensive review of merger guidelines that no longer fit the market reality. Indeed, the DOJ issued a statement after the guidelines were rescinded noting that the organization will be reviewing both vertical merger guidelines and horizontal merger guidelines to “ensure they are appropriately skeptical of harmful mergers.”

FTC Commissioner Christine Wilson, who voted against rescinding the vertical merger guidelines, said withdrawing the guidelines leaves businesses in the lurch with no current legal framework or guidance to follow.

“Once again, we are withdrawing a sound policy based on economic analysis, agency experience and substantial public input unilaterally with little notice to the public and with no opportunity for public input,” she said.

In July, the FTC voted 3-2 to rescind a 1995 policy statement on prior approval and prior notice requirements for mergers — something Wilson and FTC Commissioner Noah Phillips voted against. Both are Republicans; the other three commissioners are Democrats.

Rapid changes being made “Businesses want to do the right thing, they want to do the legal thing, but they need to know what the law is,” he said. “Quickly removing a legal standard that was put in process with a great deal of input and consideration and leaving nothing there in its place really puts American businesses who want to follow the law in a very uncertain position.”

Along with concerns about the loss of the 2020 vertical merger guidelines, Petricone said he is also uneasy about the FTC’s current process of rescinding past polices without seeking public input.

“These are important decisions for American companies, and these are huge decisions for the American economy and U.S. competitiveness,” Petricone said. “They need to be done with input and consideration, not hastily.” 


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