Among the many public-interest comments submitted on the draft merger guidelines proposed by the U.S. Justice Department (DOJ) and Federal Trade Commission (FTC) were those of Gregory Werden, who has been a visiting scholar at the Mercatus Center at George Mason University since late 2022.
Why is Greg’s filing special? Simply put, he is the leading expert on the history and technical analysis of modern merger guidelines, having worked on the 1982, 1984, 1992, 1997, and 2010 versions as a senior DOJ antitrust economist. He has authored numerous scholarly articles assessing the competitive analysis of mergers and explaining the content of prior guidelines.
As such, there is little doubt in my mind that Greg Werden’s detailed (51 single-spaced pages), scholarly, yet remarkably concise critique of the draft merger guidelines will prove enormously influential to courts. Judges may be expected respectfully to take note that Werden is no antagonist of the antitrust enterprise. After all, during his more than four decades as a distinguished senior DOJ economist, he “helped prepare numerous sets of enforcement guidelines and over a hundred briefs filed in the appellate courts or the Supreme Court.”
Greg’s filing speaks for itself, and I will not attempt to summarize its many directly stated yet often nuanced points. Greg’s comments artfully weave together antitrust history, sound analysis of judicial precedents, legal philosophy, and (of course) finely honed antitrust economics.
I will, however, make an exception and highlight one statement embodied in the opening paragraph of Greg’s submission:
Past Merger Guidelines (MGs) and Horizontal Merger Guidelines (HMGs) were devised to uphold the rule of law by explaining how the Agencies exercised discretion in enforcing Section 7. Past MGs and HMGs, thus, articulated principles and standards to identify mergers the Agencies intended to challenge and mergers they intended not to challenge. The draft Merger Guidelines (dMGs) seem to have a different objective, as evidenced by how little they say about which mergers the Agencies do not challenge.
This brief understated observation gets to the heart of the matter. What good are “guidelines” that provide little specific guidance to parties subject to government oversight? In particular, what are private parties contemplating a potential merger to do if they are left in the dark as to whether or not a particular acquisition might be challenged? Facing uncertain possible future litigation costs, they may—in many cases—decide not to proceed with the transaction. Many efficiency-enhancing welfare-promoting mergers may therefore be sacrificed due to governmentally generated business uncertainty.
This may, of course, be precisely what DOJ and FTC officials desire. Notably, as Werden also points out, the draft merger guidelines fail to include statements found in prior merger guidelines explaining that the antitrust-enforcement agencies seek to avoid unnecessary interference with competitively beneficial or neutral mergers.
Perhaps then, the guidelines in their current form may best be viewed as a philosophical rejection of mergers in general. (Such a flat rejection flies in the face of sound economic analysis, such as the literature on the market for corporate control.) Unfortunately for the DOJ and FTC, however, courts are unlikely to endorse such an eccentric, economically flawed vision.