This Perkins Coie memo highlights a potentially important shift in emphasis by the DOJ & FTC in antitrust merger challenges:
In a stark deviation from the traditional emphasis on consumer harm, as detailed in the Horizontal Merger Guidelines, both the FTC and the DOJ have pursued cases to block mergers based on potential competitive harm to large, national customers—the type of powerful, sophisticated customers that had previously been considered able to defend themselves against postmerger price increases by exerting their considerable buying power.
Increasingly, however, the federal agencies and some courts are adopting the argument that within certain narrowly drawn national markets, there are so few actual and potential competitors able to serve those large customers that the apparent countervailing power to restrain price increases is insufficient to prevent price increases.
If this trend continues, companies will need to assess the likely effects of their deal on all customer segments – and should be prepared to address the transaction’s implications for nationwide customers for whom local competitors don’t provide an alternative. However, the memo points out that depending on how the Trump Administration decides to approach antitrust merger review, this trend may prove to be short-lived.
– John Jenkins