By Jeffrey May, J.D.
Guidance anticipated on application of antitrust to tech platforms and on merger review, particularly vertical merger review, in the coming months.
Speaking at Fordham University's 46th Conference on International Antitrust Law and Policy today, FTC Chairman Joseph Simons detailed the guidance that he anticipates the Commission will release as a result of the FTC’s Hearings on Competition and Consumer Protection in the 21st Century. With the series of 14 hearings now wrapped up, Simons said in his keynote address that the agency is turning its attention to producing output from those hearings.
The FTC is in the process of drafting a guidance document explaining how the antitrust laws might apply to conduct by technology platforms that is expected to be similar in format to the 2000 joint Competitor Collaboration Guidelines. Simons suggested that the guidelines would define technology platforms and consider the U.S. Supreme Court's 2018 decision in Ohio v. American Express Co., on two-sided markets. In addition to market power issues, he expects a discussion of conduct issues as well.
Merger enforcement guidance. The FTC also is working on additional guidance on merger enforcement. Earlier this year at the American Bar Association Section of Antitrust Law Spring Meeting, both Simons and Makan Delrahim, Assistant Attorney General in charge of the Department of Justice Antitrust Division, said that both their agencies were looking into providing guidance to practitioners and business on vertical mergers. While Simons confirmed that discussions were under way with the Antitrust Division to develop joint vertical merger guidelines (and other planned guidance), he said that it was too early to say whether that effort would be successful. William Rinner, counsel to Assistant Attorney General Delrahim, said during a later panel at the Fordham conference that he remained hopeful that both agencies can embrace a single vertical merger guidelines document.
Some antitrust attorneys and members of the business community have called for guidance in this area. The Justice Department’s non-horizontal merger guidelines date back to 1984, and interest in the area was rekindled by the government’s unsuccessful challenge to AT&T, Inc.’s proposed $108 billion acquisition of Time Warner, Inc.
In any event, the FTC chair said that the FTC could release a guidance document on vertical mergers in the near future. The document would be similar to the 2006 Commentary on the Horizontal Merger Guidelines, according to Simons, and it "will make clear that anticompetitive vertical mergers are not unicorns, and there should not be a presumption that all vertical mergers are benign."
With respect to horizontal mergers, Simons anticipates an addendum to the 2006 Horizontal Merger Commentary. The addendum will explain how staff analyzes acquisitions of nascent competitors and how staff accounts for non-price factors in horizontal merger analysis. Acquisitions of nascent competitors, sometimes called "killer acquisitions," have been the subject of criticism, particularly in the tech sector, in recent years.
Simons said that the FTC is in discussion with the Antitrust Division regarding the planned guidance and reports. Yesterday, Delrahim announced at the Fordham conference that he has directed the Antitrust Division to undertake a review of the International Guidelines.
U.S. Safe Web Act. On the consumer protection front, Simons mentioned the agency's efforts to reauthorize US SAFE WEB Act, which is currently subject to a "sunset" provision that will terminate it on September 30, 2020. The SAFE WEB Act gives the FTC critical powers to enhance cross-border cooperation on consumer protection investigations and fraud actions, as well as to support cross-border data transfer mechanisms, Simons explained. According to the FTC chair, the hearings confirmed the Act’s value and success. He is hopeful that Congress will eliminate the sunset provision so that the Act's provisions can become a permanent part of the FTC Act. Simons noted that the agency also was considering output on privacy and data security issues.
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