FTC and DOJ: Have We Been Getting Digital Mergers Wrong? Let Us Know
The Federal Trade Commission and the Department of Justice, the two federal agencies tasked with enforcing antitrust law in the US, announced Tuesday that they will rethink how they've been evaluating proposed corporate mergers, and large tech firms, already widely resented by politicians in both parties, have reason to be nervous about the outcome.
Essentially, the FTC and the DOJ are saying that the price isn’t always right, that judging a merger by whether it will make customers pay more doesn’t capture the possible harms of a corporate combination.
That “consumer welfare” standard has dominated US antitrust policy from the 1970s onward–even as the digital economy has made free services an increasingly large part of the US consumer experience since the last revision of these merger guidelines in 2010.
“Just as we must revise our theories and models to fit new facts and evidence, we must ensure that our merger guidelines accurately reflect the realities of the modern economy.” FTC Chair Lina Khan said in a Tuesday press conference.
President Biden’s quick appointment of Khan, a skeptic of the consumer-welfare standard and a critic of Amazon’s market power, provided early evidence of this administration’s interest in revisiting antitrust orthodoxy. In July, a White House executive order to promote competition asked the DOJ and FTC to review their merger guidelines.
A subsection of the 10-page document prepared by the FTC and DOJ covers digital markets in particular. It asks a series of questions that can be read as an expression of regulators’ remorse over approving past tech tie-ups:
“How should markets be defined in the case of mergers in the digital sector where products and services undergo rapid change?” (Think
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