Meet the New FTC—Same as the Old FTC
Federal Trade Commission Chair Andrew Ferguson reaffirms the flawed 2023 merger guidelines.
Federal Trade Commission (FTC) Chair Andrew Ferguson announced Tuesday that the 2023 joint merger guidelines adopted by the Biden administration's FTC and Department of Justice (DOJ) are still in effect. While continuity in merger policy is crucial for economic decision making, the 2023 guidance abandons the consumer welfare standard for an anachronistic approach based on market shares. The Trump administration should not perpetuate the Biden administration's error.
The FTC and DOJ published their first joint guidelines in 1992. There have only been three revisions since. Ferguson explains that the continuity of these guidelines between administrations avoids "a recriminatory cycle of partisan rescissions" that frustrates the ability of businesses to plan. The deluge of filings submitted to the FTC's Premerger Notification Office in advance of the Commission's updated transaction thresholds and filing fees is evidence of this uncertainty; submitting before the most recent filing change saved firms over $100,000 on multi-billion-dollar mergers. Ferguson's concern about inconstant merger guidelines is well founded, but he ignores that the 2023 guidelines are themselves economically harmful.
Daniel Gilman, senior scholar of competition policy at the International Center for Law and Economics (ICLE), explains that merger guidelines are not federal regulations; they do not carry the force of law. Still, these guidelines can exert "some influence on the courts," which can cite them as persuasive authority, similar to law-review articles, noted treatises, and other expert opinions, per Gilman.
The 2023 guidelines, though not binding on courts, revert antitrust enforcement policy to a misguided framework. Brian Albrecht, chief economist of ICLE, describes how the guidelines cite Brown Shoe Co. v. United States (1962)—ignoring 50 years of case law in the process—to justify a near-exclusive focus on market concentration. However, the Supreme Court ruled in 1977 that "antitrust concerns must be evaluated on the basis of demonstrable economic effects," such as price increases and quantity reductions, explains Ted Bolema, a former attorney for the DOJ's Antitrust Division.
The structuralist approach embodied in the 2023 guidelines presumptively regards mergers as anticompetitive without considering how mitigating factors may benefit consumers, says Albrecht. Bolema observed in February 2024 that the FTC and the DOJ were "already bragging about how their merger policies" led to numerous abandoned mergers after the antitrust enforcers "indicated that they were looking to block them." The unintended consequence of the structuralist approach has been to stifle innovation by disincentivizing startup acquisitions, decreasing venture capital investments, and intimidating firms into abandoning mergers that may have otherwise generated cost savings for consumers and economic growth for all.
Instead of recognizing the developments in economics and antitrust case law since 1962, the 2023 merger guidelines focus on market concentration while ignoring dynamic forces such as "entry, innovation, [and] cost efficiencies [that] could offset or prevent harm." The FTC (and DOJ) should return to the consumer welfare standard instead of persisting in the economic illiteracy and noncomprehensive jurisprudence promulgated by the 2023 guidelines.
