Federal Antitrust Regulators Publish Revised Merger Guidelines

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Last month, federal antitrust regulators published a final version of their revised Merger Guidelines to inform their future enforcement efforts aimed at protecting fair competition in the U.S. economy. The Brewers Association (BA) submitted comments on the first draft of the revised guidelines in September. Those comments responded favorably to the proposed changes, and the BA is pleased that the final guidelines adhere to the more pro-competition direction reflected in the earlier draft.

Antitrust law, known as competition law in much of the world, seeks to protect consumers and the economy by, among other things, blocking or modifying proposed mergers and acquisitions that could reduce competition. While not the law, the Merger Guidelines articulate the views of the two agencies in charge of federal antitrust enforcement—the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ).

Small and independent brewers frequently find themselves as “minnows” in an economy increasingly dominated by giant corporate “whales.” Consolidation at the supplier tier makes beer one of the most concentrated manufacturing sectors in the U.S. Consolidation at the wholesale tier has resulted in most geographic territories being served by just two beer wholesalers capable of distributing to most retail accounts in a given territory. Consolidation at the retail tier has seen the rise of bigger and bigger “big box” and grocery chains with massive purchasing power and market share. More rigorous antitrust enforcement promises to reverse or at least slow the trend toward consolidation, giving small businesses a greater ability to compete and thrive.

The revised Merger Guidelines reflect the current administration’s more aggressive stance toward antitrust enforcement. Among other things, the revised guidelines articulate new theories for when and how a proposed transaction may harm competition, reduce the threshold size of transactions that the FTC and DOJ may “infer” (the original draft used the term “presume”) competitive harm, and recommend more scrutiny of proposed “vertical” transactions (e.g., those involving a supplier of goods and a downstream customer). In summary, the revisions give the FTC and DOJ more flexibility and leeway in challenging proposed transactions that would not have previously prompted antitrust scrutiny. The BA believes that more aggressive enforcement can help protect U.S. consumers and the ability of small and independent brewers to reach those consumers.

It is important to put the potential impact of the Merger Guidelines into a larger legal context. As noted, the guidelines are not the law but represent federal agencies’ aspirational enforcement posture toward future transactions. Courts can and sometimes do reject FTC or DOJ enforcement actions, and whether courts will embrace the revised guidelines’ more aggressive theories remains to be seen. In addition, while the revised guidelines give the FTC and DOJ enforcers more flexibility to challenge proposed transactions, the agencies do not have unlimited resources and must pick and choose what transactions to challenge. Finally, some of the approaches articulated in the revised guidelines depart from a roughly 40-year consensus on how to interpret and enforce the antitrust laws. As such, a change in administration could see federal agencies abandon the more aggressive theories of the revised guidelines.

The BA will continue to advocate for rigorous enforcement of antitrust laws so that small and independent brewers can compete in the market. We believe that the revised guidelines, while not a cure-all, will lead over time to more competition for the benefit of small brewers and the consumers of their products.

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