FTC, Department of Justice Release New Draft Merger Guidelines

FTC Entrance Sign_iStock, Gromit702

Pictured: FTC Entrance Sign/Courtesy, iStock, Gromit702

The Federal Trade Commission and the Department of Justice unveiled new draft merger guidelines on Wednesday, marking a significant shift in their approach to examining mergers in industries including the biopharma sector.

Previously, the federal government’s antitrust enforcers primarily focused on direct competition, but the updated guidelines now consider how companies leverage their negotiating power.

The draft outlines 13 principles for reviewing merger analysis, with one key principle stating that mergers should not substantially increase concentration in already highly saturated markets.

In 2021, the FTC withdrew its guidelines for vertical mergers involving adjacent markets or different parts of the supply chain. The agency’s framework for horizontal mergers was last updated in 2010. However, the new guidelines released by the FTC and DOJ cover both horizontal and vertical mergers and represent a significant overhaul of the previous guidelines.

The proposed regulatory framework comes as the FTC has recently taken legal actions against mergers, including Amgen’s $27.8 billion buyout of Horizon Therapeutics. However, critics of the FTC’s antitrust Amgen-Horizon lawsuit argue that the agency’s position is speculative, often relying on assumptions that have yet to materialize.

In 2021, President Joe Biden issued an executive order urging the DOJ and FTC to review their merger guidelines, culminating in Wednesday's release of the draft guidelines. FTC Chair Lina Khan emphasized in a statement the need to update their enforcement manual to reflect the realities of modern business practices better.

In June, the FTC and DOJ proposed changes to the premerger form that companies must complete before closing specific deals. These changes may extend the time and documentation required for companies to notify the government of a potential merger.

Last week, over a dozen industry organizations, including the biopharma lobbying groups PhRMA and BIO, jointly composed a letter addressed to FTC Secretary April Tabor urging the FTC and DOJ to extend the public comment period for the proposed notification changes. They requested sufficient time for more comprehensive and detailed responses to be submitted.

The agencies have granted a 60-day public comment period on the draft merger guidelines released on Wednesday, allowing stakeholders to provide their feedback.

Lisa Munger is a senior editor at BioSpace. You can reach her at lisa.munger@biospace.com. Follow her on LinkedIn.

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