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ANALYSIS: Thousands Commented on Merger Guidelines. What’s Next?

April 28, 2022, 9:00 AM

The Federal Trade Commission and the Justice Department have revised the merger guidelines several times during the half century since they were first created, but the agencies’ joint Request for Information on Merger Enforcement (RFI), issued on Jan. 18, marks a break from tradition.

The FTC and the DOJ have sought comment in revising the guidelines in the past, but this time they sought public comment on essentially all aspects of merger review.

The extended comment period closed April 24 with more than 5,800 comments logged. To date, the agencies have made only a fraction of those available for public review, but that sample of comments provides some interesting insights.

Outside the Bubble

The guidelines serve as a reflection of current agency procedure, and aim to keep potential parties, markets, practitioners, and the public informed of the analysis to which any merger would be subjected in agency review.

That doesn’t mean that the agencies haven’t sought comment in the past when making changes—they did when revising the guidelines in 2010, for example. But seeking input on a broad scale is very different: The DOJ and the FTC have turned the tables by asking the general public about what the agencies should consider on a wide range of issues, challenges, and methods.

As a creature of internal procedures, the guidelines have in the past been created in a bit of a bubble. They’ve represented the current thinking and practice at the agencies, based on what the agencies were seeing in mergers they review, hearing from parties, and learning from interacting with others in the antitrust community.

But with this RFI, the agencies are looking for input that they wouldn’t normally receive: broad comment on how mergers are working for a wider array of interested parties.

Also in contrast to past incremental (and relatively infrequent) changes to the guidelines, this revision looks to be taking a comprehensive approach to review and revision. The agencies asked for input on 165 questions, grouped into 15 areas of inquiry.

The request includes questions about technical issues, like how merger efficiencies are measured and the extent to which mergers “pass through” savings to consumers, and big questions, like whether the guidelines reflect the Clayton Act and what merger effects should count as “lessening competition.”

Anonymous Comments

The dedicated regulations.gov page lists the number of comments filed in response to the Request for Information at 5,845 responses as of April 27.

In the RFI, the agencies encouraged “the public, including market participants, government entities, economists, attorneys, academics, unions, workers, farmers, ranchers, businesses, franchisees, and consumers” to share “feedback, evidence, and ideas.” Of the thousands of comments received, the agencies had posted 720 (a number that appears to be growing) for public viewing as of Wednesday morning. And based on our search of these posted comments for submissions containing the term “anonymous”, more than 200, or roughly 30%, were submitted by anonymous filers.

A noticeable number of the comments, both signed and anonymous, consist of fairly short, single-paragraph online text submissions. These concise and informal submissions stand out in contrast to the PDF attachments of multi–page formal comment letters more commonly submitted by experts and institutional commenters. By way of illustration, one such comment, with the Submitter Name field populated with “Average Joe”, states “I am an Average Joe. Just one of many in the workforce who at times has been on the ‘receiving end’ of antitrust practices.”

It’s worth also noting that among the anonymous comments that were posted by the agency for review, three contain “Mass Mail Campaign” in their title and, by the text of the comments, appear to be just that. Each of the three “Mass Mail Campaign” entries cites a total number received, which likely means that each is actually a representative sample of a collection of duplicate or near duplicate comments that the agencies have received. For example, one anonymous comment contains this title “Mass Mail Campaign 1: Comment Submitted by Anonymous (Total as of 03/15/2022): 64”, possibly indicating that 64 duplicates of the comment provided were received.

Why an RFI?

Requests for Information such as this—though similar to and, as a practical matter, sometimes indistinguishable from Advance Notices of Proposed Rulemaking (ANPRMs)—are typically used by agencies early on in the rulemaking process. RFIs seek to gather data, views, and promote public engagement at a juncture “when an agency is determining whether to proceed [with rulemaking] at all and, if so, what general approach to take,” according to the Administrative Conference of the United States (ACUS).

A 2018 ACUS report on public engagement in rulemaking makes the following recommendation, among others, regarding RFIs:

RFIs should (1) be used whenever the agency is open-minded about appropriate courses of action, (2) be neutral about whether or how the identified issues or problems will or should be addressed, and (3) pose detailed questions that are aimed at soliciting the situated knowledge and data necessary for the agency to make informed decisions. We would also encourage agencies to engage in robust outreach efforts to bring their RFIs to the attention of missing stakeholders and unaffiliated experts to increase the likelihood that they will receive balanced comments that reflect all of the relevant interests and perspectives, and to maximize the likelihood that they will receive the situated knowledge and data they are seeking.

It seems that the FTC and DOJ have largely followed this playbook, including by holding listening sessions for the general public “to hear from those who have experienced firsthand the effects of mergers and acquisitions.” And, judging by the number of comments received, the agencies were successful in the engagement and information–gathering portion of the process. Next is the potentially more difficult task of acknowledging and considering the responses.

Lots of Worry

Although the disclosed comments include statements by law professors, economists, researchers, and advocacy groups, most of the disclosed comments appear to be from individual members of the public. Looking through the disclosed comments reveals a catalog of concern from people engaged in different industries.

Some commenters state that they provide health care in various roles and express concern about consolidation and profit-seeking in their industry. Of the 720 disclosed comments on Wednesday morning, 139 discuss “health care” and 146 mention “healthcare.”

Airlines” are mentioned in 106 comments, and 125 comments mention media consolidation. Comments also raise concerns about consolidation and market power in the “gaming industry” or “video games,” with several comments opposing the proposed Microsoft Corp. and Activision/Blizzard Inc. merger.

Commenters also remarked on consolidation’s impact on the job market. Jobs turned up in 116 comments, and 88 comments discuss employment.

Broader Request, Broader Impacts?

Revised guidelines have the potential to greatly influence future mergers. The guidelines are the template for how the agencies approach proposed deals, which factors matter, and how much regulatory review a merger will receive. To some extent, updating the tools and methods in the guidelines will impact outcomes for merging parties.

Given the volume of comments and the fraction that are open for review, it’s hard to know what their impact on the whole process will be. But the breadth of the agency review underway breaks from past efforts. It seems probable that new analytical tools and standards for assessing market harm are on the table, and particularly that the agencies’ approach to vertical deals is in flux. It’s also an open question how courts will receive the revised guidelines, and what role the guidelines will have in challenging mergers in court.

What’s clear, however, from reading the public sample of these comments is that they could constitute an interesting set of leads for agency investigations. The agencies asked for information about harmful mergers and malfunctioning markets, and they likely got an earful.

Now that comments are closed, DOJ and FTC will review them. In the past, guideline revisions have taken around a year to complete.

Bloomberg Law subscribers can find related content on our Antitrust Practice Center and M&A Deal Analytics resources.

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