On August 19, the Federal Trade Commission and the Department of Justice Antitrust Division (the “Agencies”) released new guidelines detailing their approach to assessing the competitive implications of horizontal mergers, and the circumstances in which such mergers will be challenged. The guidelines replace the 1997 Horizontal Merger Guidelines, which, over time, have ceased to reflect, at least in some respects, how the Agencies were actually assessing proposed transactions. Inconsistencies between the Agencies’ current approach and the old guidelines had also begun to serve as an impediment to Agency success when challenging proposed mergers in the courts. In announcing the new guidelines, Assistant Attorney General for Antitrust Christine Varney stated that the new guidelines would provide greater “transparency” regarding the Agencies’ current thinking in this area.

While many of the core principles of the earlier guidelines remain undisturbed, the heavy emphasis in the old guidelines on market definition and the increase in market share created by the merger have been replaced in the new guidelines by a more flexible, totality of the circumstances approach. Specifically, the new guidelines make clear that, at the end of the day, the Agencies’ principal focus is on whether the transaction has the potential to cause competitive harm to consumers, and the change in market share created by a merger will be viewed as only one indicator of the potential competitive significance of a transaction. The new guidelines also indicate that the Agencies will closely examine the parties’ views of the competitive effects of the transaction (gleaned from their internal documents), and customer views of the deal, in seeking to assess the likely competitive significance of a proposed deal and whether a challenge is warranted. The new guidelines take immediate effect.