Senator Warren, Rep. Balint, and Lawmakers Urge FTC and DOJ to Finalize Merger Guidelines, Strengthen Antitrust Enforcement to Protect Consumers

Letter

Dear Chair Khan, Commissioner Slaughter, Commissioner Bedoya, and Assistant Attorney
General Kanter:

We write in support of the Federal Trade Commission (FTC) and Department of Justice (DOJ)
Antitrust Division's draft merger guidelines. The proposed guidelines align with the
congressional intent of the antitrust laws, are rooted in statute and binding Supreme Court
precedent, and are necessary at a time of excessive consolidation and inequality. We urge the
FTC and DOJ to move rapidly to finalize these guidelines, and consider additional ways to
strengthen antitrust enforcement and protect consumers as your agencies do so.

I. Congress Intended the Antitrust Laws to Promote Fair Competition and Protect
Democracy

Congress enacted bold, transformative legislation to address economic concentration during the
late nineteenth and twentieth centuries -- and this legislation continues to serve as the foundation
of modern antitrust law. The Sherman Act of 1890, Clayton Act of 1914, and Celler-Kefauver
Antimerger Act of 1950 each reflected legislative agreement that unchecked consolidation
threatens democracy, economic vitality, individual liberty, and the well-being of local
communities.

The Sherman Act prohibits "every contract, combination … or conspiracy, in restraint of trade,"1
and imposes criminal liability on persons who "monopolize, … attempt to monopolize, or
combine or conspire… to monopolize."2 Congress adopted the law near-unanimously in response
to Gilded Age monopolists' domination of major American industries such as railroads, mining,

1 15 U.S.C. 1.
2 15 U.S.C. 2.

and manufacturing.3 The Sherman Act was "designed to be a comprehensive charter of economic
liberty aimed at preserving free and unfettered competition as the rule of trade."4
Contemporaneous legislative debates "conclusively show . . . that the main cause which led to
the legislation was . . . the vast accumulation of wealth in the hands of corporations and
individuals . . . and the widespread impression that [trusts'] power had been and would be
exerted to oppress individuals and injure the public generally."5 At the time, "conviction was
universal that the country was in real danger from . . . aggregations of capital in the hands of a
few individuals and corporations controlling, for their own profit and advantage exclusively, the
entire business of the country."6 After the Supreme Court held the Sherman Act prohibited only
"unreasonable" agreements in restraint of trade,7 Congress, encouraged by President Wilson,
moved to strengthen the antitrust laws.8

Congress adopted the Clayton Act of 1914 with the stated purpose of "arrest[ing] the creation of
trusts, conspiracies, and monopolies in their incipiency and before consummation."9 The act
prohibited acquisitions that had the effect of "eliminat[ing] or substantially lessen[ing]
competition" or "creat[ing] a monopoly."10 It also barred unfair competitive practices in their
incipiency, such as price discrimination,11 exclusive or "tying" contracts,12 and interlocking
directorates.13 Federal courts once again applied a narrow view to the antitrust legislation,
holding the Clayton Act's prohibition on acquisitions applied only to transactions that had a
likelihood of creating a monopoly14 and that involved the purchase of stock, rather than the
purchase of assets.15

Congress was alarmed by accelerating mergers following World War II,16 reflected by
"substantial agreement that the level of economic concentration [was] extremely high."17 The

3 U.S. National Archives, "Sherman Anti-Trust Act (1890),"
https://www.archives.gov/milestone-documents/sherman-anti-trust-act
4 N. Pac. R. Co. v. United States, 356 U.S. 1, 4 (1958) (explaining that the Sherman Act "rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality, and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions.").
5 Standard Oil Co. v. United States, 221 U.S. 50 (1911).
6 Id. at 83 (Harlan, J., concurring in part and dissenting in part).
7 Id. at 60.
8 California v. Am. Stores Co., 495 U.S. 271, 285-86 (1990).
9 Senate Judiciary Committee Report, 6553 S.rp.698, p. 1.
10 Id., p. 8.
11 An Act To supplement existing laws against unlawful restraints and monopolies, and for other purposes, Public
Law 63-212, §2 (codified at 15 U.S.C. 13).
12 Id. § 3 (codified at 15 U.S.C. 14).
13 Id. § 8 (codified at 15 U.S.C. 19); Cornell Law School, "tying arrangement,"
https://www.law.cornell.edu/wex/tying_arrangement
14 Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962).
15 FTC v. Western Meat Co., 272 U.S. 554 (1926) (holding that the Clayton Act of 1914 applied to acquisitions of
stock but not acquisitions of assets); Senate Judiciary Committee Report, 11369 S.rp.1775, p. 2.
16 House Judiciary Committee Report, 11300 H.rp.1191, p. 2.
17 Senate Judiciary Committee Report, 11369 S.rp.1775, p. 3.; House Judiciary Committee Report, 11300 H.rp.1191, p. 2 ("[M]easured by practically any method and compared to practically any standard, the level of economic

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legislature therefore passed the Celler-Kefauver Antimerger Act of 1950 to "limit future
increases in the level of economic concentration resulting from corporate mergers and
acquisitions."18 The act amended the Clayton Act of 1914 "by broadening its scope so as to cover
the entire range of corporate amalgamations" and by "chang[ing] the test of illegality" for
mergers.19 Instead of the likelihood-based standard applied by the judiciary, Congress prohibited
any acquisitions where, "in any line of commerce … in any section of the country, the effect of
such acquisition[s] may be substantially to lessen competition, or to tend to create a
monopoly."20 Congress hoped these changes would empower enforcers to prevent economic
concentration before it occurred,21 or as the Supreme Court put it, "to brake this force at its outset
and before it gathered momentum."22

In adopting these laws, Congress made clear that fair competition is vital to preserving
democracy and local economic independence. The lead sponsor of the 1950 bill, Senator Estes
Kefauver, framed the choice as between "permit[ting] the economy of the country to gravitate
into the hands of a few corporations . . . with . . . the destiny of the people determined by the
decisions of persons whom they never see," or "preserv[ing] small business, local operations,
and free enterprise."23 He warned that "[w]hen [people] lose the power to direct their economic
welfare they also lose the means to direct their political future."24 In analyzing the congressional
intent underlying the antitrust laws, the Supreme Court noted "Congress' fear not only of
accelerated concentration of economic power on economic grounds, but also of the threat to
other values a trend toward concentration was thought to pose," namely values such as ""local
control' over industry and the protection of small businesses."25 The antitrust laws reflect
Congress' strong intent to promote competition, prevent consolidation, and protect democracy
and local communities.

concentration in the American economy is high.").
18 Senate Judiciary Committee Report, 11369 S.rp.1775, p. 3.
19 United States v. Philadelphia Nat'l Bank, 374 U.S. 321 (1963); U.S. House of Representatives, "The CellerKefauver Act: Sixteen Years of Enforcement," October 16, 1967, pp. 14, 26.
20 15 U.S.C. 18.
21 Senate Judiciary Committee Report, 11369 S.rp.1775, p. 4-5 (explaining the 1950 amendment sought "to cope with monopolistic tendencies in their incipiency").
22 Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962).
23 96 Congressional Record 16450 (1950).; Institute for Local Self Reliance, "Rolling Back Corporate
Concentration: How New Federal Antimerger Guidelines Can Restore Competition and Build Local Power," Stacy Mitchell and Ron Knox, June 2022, pp. 9-10, https://cdn.ilsr.org/wp-content/uploads/2022/06/ILSR-New-FederalAnti-Merger-Guidelines-Can-Restore-Competition.pdf
24 House Committee on the Judiciary, Subcommittee No. 3, 81st Cong. 12., "Amending Sections 7 and 11 of the Clayton Act: Hearing on H.R. 988," 1949; Institute for Local Self Reliance, "Rolling Back Corporate Concentration: How New Federal Antimerger Guidelines Can Restore Competition and Build Local Power," Stacy Mitchell and Ron Knox, June 2022, https://cdn.ilsr.org/wp-content/uploads/2022/06/ILSR-New-Federal-AntiMerger-Guidelines-Can-Restore-Competition.pdf
25 Brown Shoe Co., Inc. v. United States, 370 U.S. 294, 316, 344 (1962). (recognizing "Congress' desire to promote competition through the protection of viable, small, locally owned businesses"); Senate Judiciary Committee Report, 11369 S.rp.1775, p. 3; Brown Shoe Co. v. United States, 370 U.S. 294, 344 (1962), Institute for Local Self Reliance, "Rolling Back Corporate Concentration: How New Federal Antimerger Guidelines Can Restore Competition and
Build Local Power," Stacy Mitchell and Ron Knox, June 2022, https://cdn.ilsr.org/wp-content/uploads/2022/06/ILSR-New-Federal-Anti-Merger-Guidelines-Can-RestoreCompetition.pdf

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II. FTC and DOJ's Merger Guidelines Have Diverged from the Intent of the
Antitrust Laws

The FTC and DOJ are entrusted with enforcing federal antitrust laws.26 The agencies have issued
enforcement guidelines periodically since the Celler-Kefauver Antimerger Act of 1950 in order
to inform regulated entities of the standards used to review and potentially challenge transactions
under the Clayton Act.27

The agencies issued the first merger guidelines in 1968.28 Those guidelines adhered closely to the
congressional intent of the antitrust laws, stating at the outset that the enforcers' "primary role …
is to preserve and promote market structures conducive to competition."29 The guidelines
established a presumption that enforcers would challenge mergers between firms that exceeded
clear thresholds of the market share of the acquiring and acquired firm.30 For example, in markets
where the four largest firms had 75 percent or more of market share, enforcers would challenge
any merger in which a firm with 10 percent market share would acquire a firm with 2 percent or
more market share.31 They also provided that enforcers would apply stricter standards to mergers
in markets with a trend toward consolidation and made clear that economic efficiency would not
normally be accepted as justification for a merger.32

The 1982 guidelines marked a severe and unjustified shift in enforcement policy.33 The
guidelines proclaimed, without grounding in antitrust law or legislative history, that "mergers
generally play an important role in a free enterprise economy."34 The guidelines significantly
relaxed the thresholds that triggered scrutiny of mergers and "raise[d] the benchmark levels for
classifying markets as concentrated."35 The 1982 guidelines overemphasized narrow
considerations of economic efficiency, but even in doing so cautioned that enforcers should

26 U.S. Federal Trade Commission, "The Enforcers,"
https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/enforcers
27 U. S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," pp. 1-2, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf.; Institute for Local SelfReliance, "The Biden Administration's Proposed Merger Guidelines: An Explainer," Stacy Mitchell and Ron Knox, August 10, 2023, https://ilsr.org/the-biden-administrations-proposed-merger-guidelines-an-explainer/
28 White House, "Protecting Competition Through Updated Merger Guidelines," July 19, 2023,
https://www.whitehouse.gov/cea/written-materials/2023/07/19/protecting-competition-through-updated-mergerguidelines/
29 U.S. Department of Justice, "1968 Merger Guidelines," https://www.justice.gov/archives/atr/1968-mergerguidelines
30 Id.
31 Id.
32 Id.
33 U.S. Department of Justice, "1982 Merger Guidelines," https://www.justice.gov/archives/atr/1982-mergerguidelines
34 Id.
35 California Law Review, "The 1982 Department of Justice Merger Guidelines: An Economic Assessment," Janusz Ordover and Robert Willig, March, 1983, p. 535, https://www.jstor.org/stable/pdf/3480165.pdf?refreqid=excelsior %3Ad7a5905d24f7447982a743010cb72847&ab_segments=&origin=&initiator=&acceptTC=1

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consider efficiency arguments only in "extraordinary cases" and that "their magnitudes would be
extremely difficult to determine."36

Subsequent revisions to the guidelines moved further away from statutory text and congressional
intent. For example, the 1984 guidelines claimed that "antitrust laws and … the Guidelines …
are designed to proscribe only mergers that present a significant danger to competition"37 when
in fact the antitrust laws prohibit mergers where the effect "may be substantially to lessen
competition, or to tend to create a monopoly."38 In addition, despite the Supreme Court's clear
rejection of an efficiencies defense, the 1992 guidelines not only allowed firms to use efficiency
as a defense, but also eliminated the requirement that firms establish clear and convincing
evidence of efficiencies.39 The 1997 guidelines added to the list of efficiency benefits that could
be considered to include "improved quality, enhanced service, or new products."40 And the
current guidelines, issued in 2010, raised the threshold at which markets are considered to be
"highly concentrated." 41 The cumulative result of these changes is a merger control regime that
is "considerably more accommodating to mergers than in the past" and that has "facilitated rising
concentration and diminished competition more generally."42

III. The FTC and DOJ's Proposed Guidelines are Grounded in Law and Reflect the
Reality of Today's Hyper-Concentrated Economy

FTC and DOJ announced an initiative to update the merger guidelines in January 2022.43 The
agencies led a public comment period in which thousands of members of the public, "including
consumers, workers, state attorneys general, academics, businesses, trade associations,
practitioners, and entrepreneurs," provided feedback.44 FTC and DOJ published the proposed
guidelines on July 19, 2023, with a 60-day comment period to solicit feedback before finalizing
the guidelines.45

36 U.S. Department of Justice, "1982 Merger Guidelines," https://www.justice.gov/archives/atr/1982-mergerguidelines
37 U.S. Department of Justice, "1984 Merger Guidelines," https://www.justice.gov/archives/atr/1984-mergerguidelines
38 15 U.S.C. 18.
39 U.S. Department of Justice, "1992 Merger Guidelines," https://www.justice.gov/archives/atr/1992-mergerguidelines
40 U.S. Department of Justice, "1997 Merger Guidelines," https://www.justice.gov/archives/atr/1997-mergerguidelines
41 U.S. Department of Justice, "2010 Merger Guidelines," https://www.justice.gov/atr/horizontal-merger-guidelines08192010
42 Social Science Research Network, "Reviving Merger Control: A Comprehensive Plan for Reforming Policy and Practice," John E. Kwoka, Jr., October 9, 2018, p. 8, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3332641
43 U.S. Federal Trade Commission, "Federal Trade Commission and Justice Department Seek to Strengthen Enforcement Against Illegal Mergers," January 18, 2022,
https://www.ftc.gov/news-events/news/press-releases/2022/01/federal-trade-commission-justice-department-seekstrengthen-enforcement-against-illegal-mergers
44 U.S. Federal Trade Commission, "FTC and DOJ Seek Comment on Draft Merger Guidelines," press release, July 19, 2023, https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-doj-seek-comment-draft-mergerguidelines
45 Id.

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The revisions focus on "reflect[ing] the law as written by Congress and interpreted by the highest
courts," "increasing transparency and awareness," and "provid[ing] frameworks that reflect the
realities of our modern economy."46 Indeed, the proposed guidelines invoke statutory language
and judicial precedent to an extent far greater than previous iterations of the guidelines. And they
outline a path for robust antitrust enforcement at a time when it is sorely needed.

In the last quarter century, over 75 percent of American industries have become more
concentrated.47 Without robust competition, large corporations dominate industries to the
detriment of consumers, workers, and entrepreneurs of all backgrounds. Excessive market power
costs American families $5,000 per year on average.48In concentrated markets, prices increase by
at least three times,49 wages decrease by nearly 20 percent,50 and workers are likely to be forced
into restrictive employment agreements.51 The current level of economic concentration far
outstrips the state of the American economy at the time the antitrust laws were enacted.52 The
Senate report accompanying the 1950 legislation recounted testimony showing that 0.1 percent
of American corporations at the time owned 49 percent of the assets of all American
corporations.53 Now, that number is over 88 percent.54

A. The Proposed Guidelines Address Pressing Dangers to Competition

46 Id.
47 Swiss Finance Institute, "Are U.S. Industries Becoming More Concentrated?," Gustavo Grullon, Yelena Larkin, and Roni Michaely, October 25, 2018, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2612047
48 American Economic Liberties Project, "Confronting America's Concentration Crisis: A Ledger of Harms and Framework for Advancing Economic Liberty for All," July 2020, p. 3, https://www.economicliberties.us/wpcontent/uploads/2020/08/Ledger-of-Harms-R41.pdf
49 The White House, "Fact Sheet: Executive Order on Promoting Competition in the American Economy," press release, July 9, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheetexecutive-order-on-promoting-competition-in-the-american-economy/; National Bureau of Economic Research, "The Rise of Market Power and the Macroeconomic Implications," Jan De Loecker, Jan Eeckhout, and Gabriel Unger, November 15, 2019, p. 4, https://www.janeeckhout.com/wp-content/uploads/RMP.pdf
50 U.S. White House, "Fact Sheet: Executive Order on Promoting Competition in the American Economy," July 9, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-order-onpromoting-competition-in-the-american-economy/; Journal of Human Resources, "Labor Market Concentration," José Azar, Ioana Marinescu, and Marshall Steinbaum, May 2020, https://jhr.uwpress.org/content/wpjhr/early/2020/05/04/jhr.monopsony.1218-9914R1.full.pdf
51 White House, "Fact Sheet: Executive Order on Promoting Competition in the American Economy," press release, July 9, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/07/09/fact-sheet-executive-orderon-promoting-competition-in-the-american economy/; Economic Policy Institute, "Noncompete Agreements,"
Alexander Colvin and Heidi Shierholz, December 10, 2019, https://www.epi.org/publication/noncompeteagreements/
52 Chicago Booth, "100 Years of Rising Corporate Concentration," Spencer Kwon, Yueran Ma, and Kaspar Zimmerman, February 2023, https://www.dropbox.com/s/04vi33osojfpeb0/Concentration100Years.pdf?dl=0
53 Senate Judiciary Committee Report, 11369 S.rp.1775, p. 3.
54 Chicago Booth, "100 Years of Rising Corporate Concentration," Spencer Kwon, Yueran Ma, and Kaspar Zimmerman, February 2023, p. 12, https://www.dropbox.com/s/04vi33osojfpeb0/Concentration100Years.pdf?dl=0; Business Concentration, "100 Years of Rising Corporate Concentration," Spencer Kwon, Yueran Ma, and Kaspar
Zimmerman, February 2023, https://businessconcentration.com/#main_results

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FTC and DOJ's proposed guidelines are responsive to current economic conditions and aligned
with the congressional intent of the antitrust laws. We highlight here guidelines addressing labor
market effects, serial acquisitions, and entrenchment of market dominance as particularly
powerful tools to prevent harm to workers, consumers, and small businesses.

1. Serial Acquisitions

Guideline 9 states that when a merger is a part of a series of multiple acquisitions, enforcers may
examine the whole series.55 As Congress noted in adopting the 1950 amendments to the Clayton
Act, "[a]cquisitions of stock or assets have a cumulative effect, and control of the market
sufficient to constitute a violation of the Sherman Act may be achieved not in a single acquisition
but as the result of a series of acquisitions."56 The Supreme Court has affirmed that serial
acquisitions can "convert an industry from one of intense competition among many enterprises to
one in which three or four large [companies] produce the entire supply."57

Serial acquisitions can also go unnoticed, as many of them may not reach the reporting threshold
of the Hart-Scott-Rodino Act of 1976, which requires parties to report certain large transactions
to FTC and DOJ.58 This is particularly true in healthcare markets, where serial acquisitions by
private equity have resulted in higher prices.59 For example, in 2012 Steward -- owned by private
equity firm Cerberus60 -- acquired New England Sinai Hospital for $28 million after a series of
other acute care community hospital acquisitions in which Steward lost money and was forced to
close or sell, hurting patients and workers.61 By reviewing an entire history of transactions, FTC
and DOJ will have a holistic view of market dominance, which will allow regulators to prevent
transactions that cause unnecessary harms.

2. Entrenchment or Extension of Market Dominance

Guideline 7 provides that mergers should not entrench or extend a firm's already-dominant
position.62 Courts have recognized that entrenchment of a large firm can be an "essential"

55 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 4, 22, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
56 House Judiciary Committee Report, 11300 H.rp.1191, p. 8.
57 Brown Shoe Co. v. United States, 370 U.S. 334 (1962).
58 U.S. Federal Trade Commission, "HSR threshold adjustments and reportability for 2023," February 16, 2023, https://www.ftc.gov/enforcement/competition-matters/2023/02/hsr-threshold-adjustments-reportability-2023; For an examination of this trend in the dialysis industry, see: National Bureau of Economic Research, "How to Get Away with Merger: Stealth Consolidation and Its Effects on US Healthcare," Thomas G. Wollmann, July 2021, https://www.nber.org/papers/w27274
59 Antitrust Institute, "Monetizing Medicine: Private Equity and Competition in Physician Practice Markets," Richard Scheffler et al., July 10, 2023, p. 32, https://www.antitrustinstitute.org/wp-content/uploads/2023/07/AAIUCB-EG_Private-Equity-I-Physician-Practice-Report_FINAL.pdf
60 Center for Economic and Policy Research, "Private Equity Buyouts in Healthcare: Who Wins, Who Loses?," Eileen Appelbaum and Rosemary Batt, March 15, 2020, p. 27, https://www.cepr.net/wp-content/uploads/2020/03/WP_118-Appelbaum-and-Batt.pdf
61 Id., p. 35.

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showing of anticompetitive impact underlying a Section 7 violation.63 A transaction may
entrench a dominant position by increasing barriers to entry, increasing switching costs,
interfering with the use of competitive alternatives, depriving rivals of network effects or
economies of scale, or eliminating an emerging competitive threat.64 This consideration of
entrenchment aligns with the 1968 guidelines, which gave special attention to mergers "in a
relatively concentrated or rapidly concentrating market [that] may serve to entrench or increase
the market power of that firm or raise barriers to entry in that market."65

FTC and DOJ are correct to also evaluate whether a merger may extend a firm's dominant
position into new markets, thereby substantially lessening competition in those markets.66 This
analysis is particularly critical as digital mega-corporations extend into new sectors, as Amazon
did in 2017 when it purchased Whole Foods.67 That acquisition "was seen as a minor deal in the
context of grocery retailing . . . [b]ut Amazon used the merger to further cement its dominance in
online retail by, among other things, integrating Whole Foods with its Prime membership
program, a key strategy for locking in consumers and monopolizing e-commerce."68 This
guideline will help ensure that the agencies are properly considering the realities of today's
economy.

3. Labor Effects

Guideline 11 provides that when a merger involves competing buyers, the agencies will examine
whether it may substantially lessen competition for workers or other sellers.69 Effects on workers
and labor markets generally have not been included in previous versions of the guidelines.70
However, DOJ, FTC, and courts have rightly noticed that antitrust statutes do not limit protection
only to consumers, but instead are "comprehensive in … terms and coverage, protecting all who
are made victims of the forbidden practices."71 Because workers have routinely been harmed by

62 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," pp. 3, 18, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
63 Fruehauf Corp. v. FTC, 603 F.2d 345, 353 (2d Cir. 1979); U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 18 n. 58, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
64 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," pp. 19-20, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
65 U.S. Department of Justice, "1968 Merger Guidelines," https://www.justice.gov/archives/atr/1968-mergerguidelines
66 Ford Motor Co. v. United States, 405 U.S. 562, 571 (1972).
67 Whole Foods Market, "Amazon to Acquire Whole Foods Market," press release, June 16, 2017,
https://media.wholefoodsmarket.com/amazon-to-acquire-whole-foods-market/
68 Institute for Local Self Reliance, "How New Federal Antimerger Guidelines Can Restore Competition and Build Local Power," Stacy Mitchell and Ron Knox, June 2022, https://cdn.ilsr.org/wp-content/uploads/2022/06/ILSRNew-Federal-Anti-Merger-Guidelines-Can-Restore-Competition.pdf
69 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," pp. 25-27, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
70 Bloomberg Law, "Companies Must Weigh Worker Impact Under New Merger Guidelines," Dan Papscun, July 19, 2023, https://news.bloomberglaw.com/antitrust/workforce-impact-gets-close-scrutiny-in-new-merger-guidelines
71 Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 219, 235-36 (1948).

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increasing consolidation in the U.S. economy,72 regulators will consider "whether workers face a
risk that the merger may substantially lessen competition for their labor."73 By considering the
effects of mergers on labor, regulators can prevent harms such as mass layoffs and worsening
work conditions that have resulted from excessive consolidation.

B. The FTC and DOJ Should Further Strengthen the Guidelines to Align with
Congressional Intent

Statutory text, congressional intent, and case law show that our antitrust laws were designed to
give regulators a broad set of tools to prevent consolidation. The draft merger guidelines return
to these principles in the context of the modern economy. The agencies should have confidence
in their correct reading of the law and stand on clear guidelines. To that end, the agencies should
(1.) give weight to the guidelines' stated thresholds for structural presumption and consider
lowering these thresholds, (2.) abandon their consideration of supposed efficiencies, and (3.)
refrain from using behavioral or structural remedies to approve a merger that would otherwise be
illegal.

1. Agencies Should Rely on Clear Thresholds -- and Consider Lowering These Thresholds

A merger is illegal -- and must be blocked -- where its effect "may be substantially to lessen
competition, or to tend to create a monopoly."74 The draft guidelines indicate that a merger
presumptively is illegal if the merged firm's market share is greater than 30 percent for
horizontal mergers75 or 50 percent for vertical mergers.76 While we applaud the agencies'
establishment of clear thresholds, 30 percent and 50 percent are too high.77 A company whose
market share is below these remarkably high thresholds may nevertheless exert incredible market
power.78 Further, the level of concentration at which competition concerns arise is substantially
lower in buyer markets than in seller markets, given the unique features of certain buyer
markets.79 What is more, the DOJ knows this: the 1968 guidelines limited the size of any
producer to 25 percent of a market, prohibited horizontal mergers that would result in fewer than

72 Social Science Research Network, "Concentration in US Labor Markets: Evidence from Online Vacancy Data," José Azar et al., March 9, 2018, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3133344; Social Science Research Network, "Estimating Labor Market Power," José Azar, Steven Berry, and Ioana Elena Marinescu, September 18, 2019, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3456277
73 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 26, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
74 15 U.S.C. 18.
75 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 19, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
76 Id., p. 17.
77 Philadelphia National Bank recognized that a market share of 30 percent was a clear threat but emphasized that lower market shares may also threaten competition. United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 364 (1963) ("Without attempting to specify the smallest market share which would still be considered to threaten undue concentration, we are clear that 30% presents that threat").; U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 7, n. 28, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
78 Institute for Local Self-Reliance, "Report: Walmart's Monopolization of Local Grocery Markets," Stacy Mitchell, June 26, 2019, https://ilsr.org/walmarts-monopolization-of-local-grocery-markets/ (finding that, though Walmart nationally captures roughly 25 percent of market share, it is nevertheless able to seriously harm competing retailers by exerting near-dictatorial control over suppliers).

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five market producers, and limited vertical mergers involving suppliers that controlled 10 percent
of a market.80 In certain cases, the appropriate threshold may be even lower, as when the
Supreme Court blocked a merger between two grocery store chains that would have resulted in a
single entity controlling 7.5 percent of the regional grocery market.81

FTC and DOJ should confidently rely on appropriately set market share thresholds rather than
wading into the murky waters of non-structural tests. Non-structural criteria are notoriously
difficult to apply. As antitrust scholar Derek Bok noted, and as the Supreme Court has
recognized,82 it is difficult to determine "reliable predictions concerning the impact on market
behavior of any but the most sweeping mergers."83 Economists may be able to analyze the causes
of market concentration in retrospect, but at that point "the damage would be done and much of
the value of preventive relief under [antitrust law] would be lost."84 Antitrust regulators should
not underestimate the difficulty and inefficiency of merger-related multi-factor tests, which
Judge Richard Posner deemed "a real blot on the American judiciary."85 The guidelines should
confidently set clear market thresholds lower than those in the current draft to protect
competition against outsized market power and avoid confusing and resource-intensive analyses.

2. Agencies Should Reject the Use of Efficiencies Defenses

The draft guidelines' discussion of "procompetitive efficiencies" begins with a straightforward
recognition of where the law stands: "the Supreme Court has held that "possible economies [from
a merger] cannot be used as a defense to illegality.'"86 As the agencies note, "[c]ompetition
usually spurs firms to achieve efficiencies internally," and efficiencies are often achievable
"without the full anticompetitive consequences of a merger."87 The agencies should end the
discussion there. Indeed, the law is clear: "a merger the effect of which "may be substantially to
lessen competition' is not saved because, on some ultimate reckoning of social or economic

79 Legal Times, "Beware Buyer Power," Robert H. Lande, July 12, 2004, p. 2,
https://scholarworks.law.ubalt.edu/cgi/viewcontent.cgi?article=1712&context=all_fac
80 Open Markets Institute, "Response by the Open Markets Institute to the Request by the Federal Trade Commission and the Antitrust Division of the Department of Justice for Information on Merger Enforcement," April 21, 2022, p. 14, https://static1.squarespace.com/static/5e449c8c3ef68d752f3e70dc/t/ 6261b1cd824c931f5dfc5910/1650569677801/ Open+Markets+Institute_+Request+for+Information+on+Merger+Enforcement_4-21-22.pdf; U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines,"
https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf
81 United States v. Von's Grocery Co. 384 U.S. 270 (1966).
82 United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 362 (1963) (citing Derek Bok's article describing the challenges of a fact-intensive approach to merger review).
83 Harvard Law Review, "Section 7 of the Clayton Act and the Merging Law and Economics," Derek Bok, p. 244, https://www.jstor.org/stable/1338755
84 Id., p. 242.
85 C. Scott Hemphill, Philadelphia National Bank at 50: An Interview with Judge Richard Posner, 80 Antitrust Law Journal (2015), https://www.jstor.org/stable/26411536
86 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 33, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf (quoting FTC v. Procter & Gamble Co., 386 U.S. 568, 580 (1967)).
87 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 33, https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf

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debits and credits, it may be deemed beneficial."88 As the Court recognized, Congress
consciously chose to support competition even in the face of certain inefficiency.89 The
preservation of efficiencies defenses is a relic of an era in which regulators relied on claims of
hypothetical efficiency by businesses at the expense of fidelity to the law, an era which the draft
guidelines disavow. The guidelines should not weaken or disturb the law by encouraging a
discussion of so-called procompetitive efficiencies.

Notwithstanding the Supreme Court's multiple explicit rejections of efficiencies,90 consideration
of efficiencies is not a productive way to determine if a merger will substantially lessen
competition. The agencies have known this since at least 1968, when the merger guidelines
stated the Department of Justice would not consider efficiencies as a defense or justification
because, among other reasons, such efficiencies can "normally be realized through internal
expansion" rather than mergers, and efficiencies are speculative and difficult to establish with
certainty.91

3. Agencies Should Abandon the Use of Structural and Behavioral Remedies

As noted, agencies are statutorily required to block illegal mergers. But rather than doing so,
DOJ and FTC have frequently used behavioral and structural remedies to attempt to restrict anticompetitive effects and allow mergers to proceed.92 However, remedies have generally failed to
maintain competitive conditions because of harmful incentives and unenforceability, among
other challenges. Behavioral remedies, which require certain commitments from the merging
parties,93 are difficult to administer and enforce. Further, once the term of the agreement expires,
the parties cease to be bound by their commitments and anticompetitive effects remain.94
Structural remedies, which modify the organization of the parties and may include divestiture(s)

88 United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 371 (1963).
89 Brown Shoe Co. v. United States, 370 U.S. 294, 344 (1962) ("[W]e cannot fail to recognize Congress' desire to promote competition through the protection of viable, small, locally owned business. Congress appreciated that occasional higher costs and prices might result from the maintenance of fragmented industries and markets. It resolved these competing considerations in favor of decentralization. We must give effect to that decision").
90 FTC v. Procter & Gamble Co., 386 U.S. 568 (1967); United States v. Philadelphia Nat'l Bank, 374 U.S. 321 (1962); and Brown Shoe Co. v. United States, 370 U.S. 294 (1962).
91 U.S. Department of Justice, "1968 Merger Guidelines," https://www.justice.gov/archives/atr/1968-mergerguidelines ("Unless there are exceptional circumstances, the Department will not accept as a justification for an acquisition normally subject to challenge under its horizontal merger standards the claim that the merger will produce economies (i.e., improvements in efficiency) because, among other reasons, (i) the Department's adherence
to the standards will usually result in no challenge being made to mergers of the kind most likely to involve companies operating significantly below the size necessary to achieve significant economies of scale; (ii) where substantial economies are potentially available to a firm, they can normally be realized through internal expansion; and (iii) there usually are severe difficulties in accurately establishing the existence and magnitude of economies claimed for a merger.")
92 U.S. Federal Trade Commission, "The Evolving Approach to Merger Remedies," press release, May 1, 2000, https://www.ftc.gov/news-events/news/speeches/evolving-approach-merger-remedies
93 CPI Antitrust Chronicle, "Structural vs. Behavioral Remedies," Frank Maier-Rigaud and Benjamin Loertscher, April 2020, p. 4, https://www.nera.com/content/dam/nera/publications/2020/PUB_CPI_Remedies.pdf
94 U.S. Department of Justice, "Assistant Attorney General Makan Delrahim Delivers Remarks at the Federal Telecommunication Institute's Conference in Mexico City," November 7, 2018,
https://www.justice.gov/opa/speech/assistant-attorney-general-makan-delrahim-delivers-remarks-federal-institute

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of parts of the business,95 are at first glance more enforceable but also fail to maintain
competitive conditions as companies have an incentive to ensure the divestitures do not
succeed.96

Allowing structural and behavioral remedies also encourages parties to "litigate the fix" -- that is,
to propose remedies during ongoing litigation in order to force the judge's focus from the
original transaction to the ostensible "fix."97 This maneuver affords firms multiple bites at the
apple and often resolves only some of the underlying transaction's anticompetitive effects.98
Companies have increasingly discussed options for litigating the fix alongside merger
negotiations and announcements, indicating that consideration of remedies is relevant to merger
enforcement at every stage and within the merger guidelines' scope.99 The guidelines should
make clear that the agencies will not propose, entertain, or accept behavioral or structural
remedies as part of merger review.

95 CPI Antitrust Chronicle, "Structural vs. Behavioral Remedies," Frank Maier-Rigaud and Benjamin Loertscher, April 2020, p. 4, https://www.nera.com/content/dam/nera/publications/2020/PUB_CPI_Remedies.pdf
96 Institute for Local Self-Reliance, "Strengthening Enforcement Against Illegal Mergers: Updating the Merger Guidelines," April 21, 2022, p. 29, https://cdn.ilsr.org/wp-content/uploads/2022/04/ILSR-Merger-GuidelinesComment-Letter.pdf_gl=1*d9wp0k*_ga*NzMwNzM3MjkwLjE2OTI4MDIwNTg.*_ga_M3134750WM*MTY5MjgwNDc0MC4yLjEuMTY5MjgwNDkxNS4wLjAuMA..*_ga_YH781K3X7X*MTY5MjgwNDc0MC4yLjEuMTY5MjgwNDkxNS4wLjAuMA..&_ga=2.266163853.329421074.1692802058-730737290.1692802058
97 Bloomberg, "ANALYSIS: How "Litigating the Fix' Is Upending Merger Review," Eleanor Tyler, May 11, 2023, https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-how-litigating-the-fix-is-upending-merger-review
98 Id.
99 U.S. Department of Justice and U.S. Federal Trade Commission, "DRAFT Merger Guidelines," p. 5,
https://www.ftc.gov/system/files/ftc_gov/pdf/p859910draftmergerguidelines2023.pdf ("The consideration of remedies appropriate for otherwise illegal mergers and acquisitions is beyond its scope.")

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Conclusion

The FTC and DOJ's proposed merger guidelines are critical to addressing the ever-changing and
complex American economy. Federal antitrust laws were intended to promote competition in
order to protect democracy, promote economic growth and innovation, secure individual liberty,
and safeguard the well-being of workers and communities. The draft guidelines address those
still-vital goals. We urge you to finalize the proposed guidelines expeditiously, and make the
additional modifications suggested above to strengthen them and ensure they are consistent with
the letter and intent of antitrust law.

Sincerely,

Source