The Biden administration’s top antitrust agency on Wednesday announced tougher guidelines for tech mergers, suggesting greater scrutiny of the industry despite recent court losses trying to block deals with tech companies. bottom.
Federal Trade Commission Chairman Lina Kern and Justice Department head of antitrust agency Jonathan Kanter have unveiled a merger review for the first time, focusing on digital platforms and how dominant companies can leverage their scale. Released draft guidelines. To harm future rivals.
The guidelines generally provide a roadmap for regulators to block or approve transactions, and are proactive measures aimed at curbing the power of companies such as Google, Meta, Apple, and Amazon. It shows the Biden administration’s commitment to antitrust policy.
The guidelines are not mandated by law and follow a string of court defeats. Last week’s ruling prevented the FTC from delaying the completion of Microsoft’s $69 billion acquisition of video game maker Activision Blizzard. In January, a court sided with the FTC in a lawsuit seeking an injunction against Meta’s acquisition of virtual reality app maker Within.
A strong antitrust stance is a pillar of President Biden’s policy to eradicate economic inequality and promote greater competition. “Increasing competition to cut costs and support small businesses and entrepreneurs is a core part of Bidennomics,” a senior government official said in a call with reporters.
The new guidelines will apply to all transactions across the economy. But they highlight obstacles to competition among digital platforms, including how acquisitions of emerging rivals are meant to extinguish future competition. Such deals, known as killer acquisitions, are rampant in the tech industry and are at the center of the FTC’s antitrust lawsuit against Meta, which owns Facebook, Instagram and WhatsApp. The agency accuses Meta of buying Instagram in 2012 and WhatsApp in 2014 to prevent future competition.
The FTC and Justice Department also said they would investigate how companies use scale, including large numbers of users, to avoid competition. These so-called network effects have helped companies like Meta and Google maintain their dominance in social media and internet search.
The two agencies also said mergers involving “platform” businesses, a model used by Amazon’s online store and Apple’s App Store, could stifle competition. Draft guidelines say acquisitions could undermine competition by giving platforms control over critical data flows, with technology giants using vast amounts of information to crush rivals. reflect concern.
“As market and commercial realities change, it is critical that law enforcement tools are adapted to protect competition in a way that reflects the complexities of the modern economy,” Kanter said in a statement. “Simply put, the competition today is different than he was 50 years ago, or even 15 years ago.”
Although the guidelines are not legally enforceable, they can affect how judges view merger and acquisition challenges. Efforts to update the guidelines are being closely monitored by companies and corporate lawyers who survive regulatory scrutiny of mega-deals.
This guideline was last updated in 2020. In 2021, Mr. Biden ordered the Justice Department and FTC to update the guidelines again as part of a broader effort to improve competition across the economy. Each agency is open to public comment on its proposals and may make revisions before the final guidelines are adopted.
“These guidelines contain important updates, but at the same time ensure adherence to congressional mandates and case law regarding the book,” Khan said in a statement.
The FTC has suffered recent court losses that have forced some companies, including chip maker Nvidia and aerospace giant Lockheed Martin, to abandon big deals. The Justice Department blocked publisher Penguin Random House’s acquisition of Simon & Schuster using the unusual allegation that the merger would harm the authors who sold the publishing rights to the books.
