The Federal Trade Commission voted today to withdraw from the Vertical Merger Enforcement Guidelines adopted last year, and the Justice Department announced that it is taking a fresh look at them.
“A fresh look at these enforcement guidelines is highly appropriate,” said George Slover, senior policy counsel at Consumer Reports. “We expressed concern last year that the process was proceeding in undue haste and without the needed care and consideration. The guidelines that resulted were half-baked and did not account for the ways vertical combinations can reduce competition and restrict options in the marketplace and choices for consumers. We appreciate the antitrust agencies taking the opportunity now to begin the process of fixing them.”
“In today’s digital economy inputs like data and algorithms can be used to produce many different services, and the biggest firms compete simultaneously in many markets and products. A more thorough consideration of vertical merger guidelines to ensure they reflect these market developments and the latest economic evidence is a welcome step.”
Vertical mergers are mergers that combine two companies that operate at different levels in a supply and marketing chain, and therefore do, or could, do business with each other. The updated Vertical Merger Guidelines replaced guidelines published in 1984, in a bygone era, before the arrival of the internet and its dramatic transformation of the marketplace. The 1984 Guidelines had for years been largely ignored in actual enforcement decision making.
During the guidelines’ consideration last year, Consumer Reports agreed that updating the 1984 Guidelines was long overdue, but said the proposed new guidelines needed more work.
“We look forward to working with the Federal Trade Commission and the Department of Justice as they undertake a deliberative process to develop guidelines that actually illuminate the competitive issues vertical mergers raise in today’s economy, so they can provide useful guidance to enforcers, businesses, and the public,” said Slover.
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