In July 2021, Biden’s administration authorized the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to amend vertical merger standards and make it more challenging for companies to merge with or acquire other companies. These measures are part of the White House’s goal to “reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, farmers, and small businesses.”

Unfortunately, these efforts completely overlook the potential harms to consumers and put consumers’ interests on the back-burner. Unlike the reflexive and ideologically rigid ‘big is bad’ approach that these antitrust efforts are prioritizing, the consumer welfare standards should be at the forefront of antitrust law and enforcement.

Last month, FTC chair Lina Khan, backed by commissioners Rohit Chopra and Rebecca Kelly Slaughter, voted to rescind Trump’s vertical rules, changing the criteria for vertical mergers and acquisitions. The FTC explained that “the guidance documents, which were published in 2020, include unsound economic theories that are unsupported by the law or market realities.”

The 2020 merger guidelines stipulated that vertical mergers would be considered pernicious if the proposed acquisition results in higher-cost products or harms consumer welfare. However, the current FTC and DOJ administration is examining whether the new rules put an overemphasis on pricing gains and whether corporate mergers could lead to anticompetitive behavior.

By rescinding these merger and acquisition rules, the FTC has committed itself to ignoring the realities that mergers and acquisitions have generated significant welfare for American consumers.

A good example of how mergers have helped consumers is the acquisitions of several commercial airlines following the terrorist attacks of September 11th and the Great Recession. American Airlines purchased Trans World Airlines for $1.5 billion in 2001, US Airways’ purchased America West for $1.5 billion in 2005, and Delta’s bought Northwest Airlines for $2.6 billion in 2006. These mergers resulted in reductions in fares that allowed more Americans to fly and preserve unprofitable routes to rural communities. Had these mergers not been authorized, consumers would probably have faced higher fares and the loss of service to rural communities.

Consumers also gained significant welfare when Facebook acquired WhatsApp in 2014. This acquisition allowed the elimination of WhatsApp service charges, allowing consumers to use the encrypted messaging service for free. Before the acquisition, consumers were billed $0.99 per year, a fee that, while not prohibitive, was more costly than the free alternatives. However, this fee was erased following the acquisition, and the service now has 68.1 million users in the United States. Furthermore, it is estimated that the number of users will reach 85.8 million by 2023. As a result, millions of consumers worldwide have been able to access the secure messaging service and remain connected to their friends and family.

The government’s efforts to prevent vertical mergers can kill competition by preventing corporations from pooling resources. In the 5G market, for example, Sprint and T-Mobile could not compete with AT&T and Verizon. However, by merging, Sprint and T-Mobile have leveraged their resources to build a competitive 5G network, increasing competition and offering lower prices. According to experts, corporate consolidation or mergers can increase competition, resulting in more expansive coverage options for mobile consumers at a reduced cost of as little as $60 for an individual line or $25 for family lines. As a result of the merger, more Americans can reap the benefits from 5G technology.

The FTC’s and DOJ’s goal to reduce the number of future mergers and acquisitions could leave consumers paying the price. Supporters of strict antitrust regulations toward big companies may applaud this move. Unfortunately, this ignores the reality that consumers could be left worse off and paying more for goods and services. Rather than a blanket presumption that vertical mergers and acquisitions will harm consumers, federal regulators should first consider the effect on consumers. Only then will the government be able to foster a regulatory environment that delivers concrete benefits to American consumers.