The Work

April 20, 2010 7:01 PM

FTC Proposes 'Flexible' New Merger Rules

Posted by Brian Baxter

UPDATE: Apr. 21, 3:00 p.m. The National Law Journal, a sibling publication, has more on the reaction from the antitrust bar to the new merger guidelines. Wachtell, Lipton, Rosen & Katz has also weighed in with its own memo on the subject.

The Federal Trade Commission on Tuesday released proposed revisions to guidelines used by antitrust regulators in reviewing horizontal mergers--or mergers between rival companies in the same industry.

Antitrust work is handled by both the FTC and the Justice Department's antitrust division, and the two worked together on compiling the 34-page list of revised guidelines. The official announcement begins a 30-day period of public comment whereby changes can be recommended before they're adopted, says Linklaters partner Jeffrey Schmidt, a former top antitrust enforcer at the FTC.

The guidelines were last revised 18 years ago. Schmidt says the proposed guidelines are a response to the way that mergers and regulatory oversight have evolved since then. They largely reflect how the FTC and the Justice Department have reviewed mergers over the past several years, he says. The new guidelines will help, as Schmidt sees it, to "better explain to the courts" the underlying economic analysis that is the foundation for regulatory review of deals.

"If there is a big impact with these revisions, I think it's likely to be with respect to the courts," Schmidt says. "[W]ith the old guidelines, the agencies have tended to be somewhat stuck with what is arguably a mechanical approach to merger analysis. This [latest] effort is to show that there are more tools available and not one approach that has to be applied in each and every merger matter."

The bottom line of any merger analysis is whether or not approval of a deal will cause anticompetitive effects on consumers. Some lawyers say the new guidelines will enable regulators in the Obama administration to take a closer look at mergers when developing antitrust cases.

"[The changes] give them more flexibility in presenting evidence as to why a merger is bad for consumers," Jones Day antitrust partner David Wales told Dow Jones Newswires. Said Howrey antitrust partner Marc Schildkraut: "It's at least going to flag more deals for further scrutiny."

Also on Tuesday, the Justice Department honored Arnold & Porter of counsel Robert Pitofsky for his lifetime body of work in the antitrust arena, according to The Blog of Legal Times, a sibling publication.

Pitofsky, who chaired the FTC from 1995 to 2001, was presented with the Justice Department's John Sherman Award at a ceremony attended by U.S. attorney general Eric Holder, Jr., and Supreme Court justice Stephen Breyer.

Last month Edith Ramirez, a former Quinn Emanuel Urquhart & Sullivan partner, was sworn in as one of the five commissioners that head the FTC.

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