Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Competition newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (April 24, 2020, 9:54 PM EDT) -- Proposed new guidelines for vertical merger enforcement are needed to make clear that tie-ups between companies on different points in the supply chain are not automatically legal, the chair of the Federal Trade Commission said Friday.
The need for that clarification — in guidance proposed by the commission and the U.S. Department of Justice in January — was driven home by the conversations concerning the DOJ's unsuccessful challenge of AT&T's purchase of Time Warner, FTC Chairman Joseph Simons said during a video conference roundtable with fellow antitrust enforcers, part of this year's spring meeting of the American Bar Association's antitrust law section.
"Some people actually were suggesting that vertical mergers were essentially per se legal. And for me, that factor really militated very strongly in favor of issuing the new guidelines to make clear that is not the case," Simons said.
The proposal would be the first new guidelines for vertical tie-ups since 1984, guidance that FTC and DOJ leadership have called severely dated. The proposed new guidelines, meant to be read in conjunction with the horizontal guidelines for deals between direct competitors issued in 2010, cover topics including how vertical mergers can harm competition and how those harms will be analyzed, as well as the competitive benefits attributed to such tie-ups.
While vertical tie-ups are often considered less competitively detrimental, Simons argued Friday that he has long believed in "vigorous" enforcement against such combinations.
"But we only challenge when the merger is likely to reduce competition. And although that might be less often than with respect to horizontal mergers on average, anticompetitive vertical mergers are not unicorns and we need to be vigilant in that area," he said.
Friday's panel also included the head of the DOJ's Antitrust Division, Makan Delrahim; along with European Union competition commissioner Margrethe Vestager; Canadian Competition Bureau antitrust chief Matthew Boswell; and Sarah Oxenham Allen,Virginia's senior assistant attorney general and antitrust unit manager, who also chairs the antitrust task force of the National Association of Attorneys General.
The panel covered an array of topics, including the COVID-19 pandemic, which has forced the ABA to hold its spring meeting virtually and has left antitrust authorities worldwide scrambling to review mergers remotely, facilitate coordination that allows companies to combat the pandemic, and cut off attempts to take advantage of the outbreak and bilk consumers or anticompetitively raise prices.
Those efforts are the backdrop to a virus that as of Friday has killed more than 182,000 people globally and sickened over 2.6 million, according to the World Health Organization. In the U.S., the Centers for Disease Control and Prevention puts the tally at over 865,000 cases, and there have now been more than 50,000 deaths.
State attorneys general have been particularly active on the consumer protection side of the outbreak, with cease and desist letters aimed at deceptive and false advertising of products billed as combating the pandemic, as well as financial fraud and product hoarding and price-gouging. But their antitrust approach to the novel coronavirus and its broader impacts has been more reserved, according to Allen.
"In antitrust, the states are basically following the lead of the federal agencies on how to address this crisis right now. And we feel that is the best approach to take rather than trying to forge our own path," she said.
In Europe, the primary antitrust focus has been in signing off on member states' aid programs, with Vestager counting the approval so far Friday of over 100 regimes with a budget of €1.8 trillion.
Prioritizing state aid approval has meant a shift in European Commission resources, with enforcers asking merging companies to hold off on submitting notification filings. Merging companies and the third parties the commission queries to assess tie-ups also have little time to respond, Vestager noted, which she said was why the commission has asked companies to speak with enforcers before filing. But she said companies with "good reasons to file now" can still do so.
--Editing by Peter Rozovsky.
For a reprint of this article, please contact reprints@law360.com.
