WASHINGTON – Top federal antitrust officials on Tuesday announced a review of how they allow mergers and acquisitions, in a broader effort to strengthen enforcement and clamp down on the rise of corporate consolidation, especially in high-tech.
Federal Trade Commission Chair Lina Khan and Justice Department chief of distrust Jonathan Canter said they wanted to rewrite the merger guidelines, which were created a dozen years ago, because they did not address the unique problems posed by the tech industry. .
This review will focus on how the merger review process is applied to free services like Google and Facebook. Often, price increases are a key criterion for competitive behavior, but that standard does not apply to ad-based business models that offer free services to customers. Regulators will also look at how the merger could affect new competitors. The FTC, for example, is suing Facebook over its acquisition of Instagram in 2012 and WhatsApp in 2014, when those services were clearly not direct competitors to Facebook.
Democratic regulators and legislators are scrambling to deliver on promises to reduce the dominance and power of a handful of tech giants, including Amazon, Apple, Facebook and Google. A Senate panel is expected to vote this week on legislation aimed at preventing competitors from blocking powerful digital platforms such as Apple’s App Store and Amazon’s Marketplace.
President Biden has asked agencies to review the guidelines as part of their efforts to strengthen the implementation of merger rules. He chose the vocal critics of the technology giants to lead the distrust efforts, but Ms. Khan and Mr. Canter has struggled to keep up with the rise of corporate acquisitions. The value of the global merger was a record $ 5.8 trillion in 2021, and the case load has doubled for the FTC and the Department of Justice to review the merger. Khan said.
Regulators said they were also interested in expanding the scope of no-confidence enforcement to take into account the potential ripple effects of corporate concentration on labor markets, innovation and consumer protection.
“This investigation, initiated by the FTC and the DOJ, is designed to ensure that our merger guidelines accurately reflect modern market realities and equip us to enforce the law against illegal transactions,” she said. Khan said.
Last year, the FTC began reviewing guidelines for so-called vertical mergers – acquisition of companies’ affiliate markets that are part of the supply chain. Tech companies have acquired a number of companies that do not compete directly with their core businesses, but have helped giants like Facebook, Amazon and Google to spread their tentacles in new markets and maintain their dominance, including Ms. Khan and Mr. Cantor argued. Microsoft, whose main business is in enterprise and consumer software, announced on Tuesday that it would buy game maker Activision Blizzard for about $ 70 billion, an example of this activity. Regulators declined to comment on the deal.
Regulators may face challenges in court against the amended rules. Judges have adhered to the decades-old interpretation of no-confidence laws, with consumer prices as the primary test of monopolies. Agencies are expected to take about a year to rewrite its merger rules.