Merger Madness

Federal Trade Commission Chair Lina Khan speaks to the Economic Club of New York on July 24, 2023, in New York City. (Photo by Michael M. Santiago/Getty Images)

Dear Capitolisters,

Two weeks ago, the Department of Justice and Federal Trade Commission proposed new draft guidelines on how the U.S. government would police corporate mergers and block illegal ones (i.e., ones that substantially “lessen competition” or “tend to create a monopoly”) under current U.S. antitrust law. The U.S. government has had merger guidelines since the late 1960s, with the latest version coming in 2010. They aren’t binding law but instead are intended to inform corporations what current law and economic principles are and whether any mergers under consideration might run afoul of them. Past merger guidelines have been widely accepted and relatively uncontroversial—even among litigants arguing about specific mergers in court. 

The new Biden administration rules are, to put it nicely, a different approach to such matters.

As we’d expect, the guidelines, 13 in all, reflect the Biden administration’s desire to aggressively regulate supposedly “anti-competitive” business activities and, in particular, to move away from a legal standard centered on “consumer welfare” to a broader and more subjective one that considers many factors, including “bigness” itself. But, as we’ll discuss today, these guidelines are no mere incremental shift toward more merger enforcement under current antitrust law—they’re a radical departure from that law and the economics and recent history of mergers in the United States. And they’re a perfect encapsulation of why antitrust hawks’ knee-jerk “Big is Bad” mindset is so misguided.

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