The Biden administration unveils stricter merger guidelines

Top antitrust officials in the Biden administration unveiled tougher guidelines against tech mergers on Wednesday, signaling deepening scrutiny of the industry despite recent court losses in their attempts to block tech deals.

Lina Kahn, chair of the Federal Trade Commission, and Jonathan Kanter, the chief antitrust official at the Justice Department, released draft guidelines for merger reviews that for the first time include a focus on digital platforms and how dominant companies can use their scale. to harm future competitors.

The guidelines — which generally provide a roadmap for whether regulators block or approve deals — show the Biden administration’s commitment to a tough antitrust agenda aimed at curbing the power of companies like Google, Meta, Apple and Amazon.

The guidelines, which are not enforced by law, follow a losing streak in the courts. A ruling last week prevented the Federal Trade Commission (FTC) from delaying closing Microsoft’s $69 billion acquisition of Activision Blizzard. In January, a court stood against the Federal Trade Commission in its lawsuit to stop Meta’s purchase of Inside, the maker of virtual reality apps.

A strong antitrust stance is one of the pillars of President Biden’s agenda to eliminate economic inequality and encourage more competition. “Encouraging competition to lower costs and support small businesses and entrepreneurs is a key part of Bidenomics,” a senior administration official said on a call with reporters.

The new guidelines will apply to all transactions across the economy. But they highlight obstacles to competition between digital platforms, including how the acquisition of an emerging competitor may aim to eliminate future competition. Such deals, known as killer buyouts, are rife in the tech industry and at the center of the Federal Trade Commission’s antitrust lawsuit against Meta, which owns Facebook, Instagram and WhatsApp. The agency accused Meta of buying Instagram in 2012 and WhatsApp in 2014 to prevent future competition.

The Federal Trade Department and Justice Department also said they would look at how companies can use their size, including the large number of users, to stave off competition. These so-called network effects have helped companies like Meta and Google maintain their dominance in social media and Internet search.

The agencies have also identified ways in which mergers involving “platforms” businesses, the model used for Amazon’s online store and Apple’s App Store, could hurt competition. The draft guidelines said the acquisition could hurt competition by giving the platform control over large streams of data, echoing concerns that the tech giants are using their vast information pool to crush rivals.

“As markets and business realities change, it is imperative that we adapt our law enforcement tools to keep up with the pace so that we can protect competition in a way that reflects the complexities of our modern economy,” Mr. Kanter said in a statement. “Simply put, competition today looks different than it did 50 — or even 15 — years ago.”

While they lack the force of law, the guidelines can influence how judges consider challenges in mergers and acquisitions. Efforts to update the guidelines have been watched closely by entrepreneurs and corporate lawyers navigating regulatory scrutiny of mega deals.

The guidelines were updated in 2020. In 2021, Mr. Biden ordered the Justice Department and the Federal Trade Commission to update them again as part of a broader effort to improve competition across the economy. Agencies will take public comment on the proposals and may make adjustments before adopting final guidelines.

“These guidelines contain important updates while ensuring fidelity to the mandate given us by Congress and the legal precedent on the books,” Ms. Khan said in a statement.

While the FTC has suffered recent court losses, it has forced some companies, including chipmaker Nvidia and aerospace giant Lockheed Martin, to drop some big deals. The Department of Justice blocked publisher Penguin Random House from buying Simon & Schuster, using the unusual argument that a merger would harm authors who sold the publishing rights to their books.