ARLINGTON, VA – The American Consumer Institute (ACI) has released a comprehensive statement expressing concerns and providing critical feedback on the draft merger guidelines proposed by the Federal Trade Commission (FTC) and the Department of Justice (DoJ).
The draft merger guidelines aim to outline the theories employed by the FTC and the DoJ when assessing mergers and acquisitions. ACI’s commentary emphasizes several key points of contention:
- Novel Theories vs. Court Outcomes: ACI questions the agencies’ insistence on continuing to employ novel theories of antitrust enforcement that have faced setbacks in court. The organization suggests a reevaluation of these strategies rather than reinforcing them through new guidelines.
- Restrictive Nature of Draft Guidelines: ACI contends that the draft guidelines are unnecessarily restrictive when compared to previous agency merger guidelines. The absence of qualifiers such as “reasonable probability” and “substantially lessening” potentially makes merging firms vulnerable to investigations based solely on market structure.
- Lack of Clarity on Harm Measurement: The draft guidelines lack a clear alternative measure of harm, despite the agencies’ desire to move away from the consumer welfare standard (CWS). ACI emphasizes the need for a consistent standard to measure mergers and acquisitions and highlights the strengths of the CWS in this regard.
- Economies of Scale and Scope: ACI underscores the importance of considering economies of scale and scope, pointing out that concentration in some markets can be beneficial and lead to innovation, cost reduction, and lower consumer prices.
- Perfect Competition as an Ideal Model: The organization challenges the assumption that perfect competition should serve as the ideal model, arguing that perfect competition is a theoretical construct that doesn’t apply to most markets.
- Overemphasis on Market Concentration: ACI expresses concerns about the draft guidelines’ excessive focus on market concentration, asserting that concentration alone does not necessarily harm consumers.
- The Brown Shoe Company Case: ACI cites the United States v. Brown Shoe Company case as an example where blocking a merger led to adverse outcomes, including decreased competitiveness and higher consumer prices. The organization emphasizes the need to prioritize consumer welfare over protecting competitors.
In its concluding remarks, ACI advocates for a merger evaluation framework based on the consumer welfare standard, asserting that this approach ensures objective and transparent assessments of mergers’ impact on consumers. ACI calls for a reevaluation of the proposed guidelines to align them more closely with established economic principles and consumer interests.
For a more detailed analysis of ACI’s comments on the draft merger guidelines, please download the full comment here.
About the American Consumer Institute: The American Consumer Institute (ACI) is a nonprofit research and education organization dedicated to promoting evidence-based policy and regulation. ACI’s mission is to advance the interests of consumers and foster competitive markets that promote consumer welfare and economic growth. For more information, please visit here.
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