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EpicRandy on 19 July 2023
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Ryuu96 said:

The Federal Trade Commission and Department of Justice said Wednesday that their new focus when evaluating mergers will include the impact a deal will have on competition for workers along with how a series of acquisitions, rather than one-offs, could result in harmful effects on the market.

The new guidelines, currently in draft form, encapsulate the agencies' push to keep pace with the digital age and a changing market. The proposed rules apply to both vertical and horizontal mergers. Almost two years ago, the FTC voted to withdraw the previous version of the vertical merger guidelines released in 2020, citing flaws.

In the new guidelines, they outlined 13 points they will use to evaluate whether a merger should be blocked:

1. Mergers should not significantly increase concentration in highly concentrated markets.
2. Mergers should not eliminate substantial competition between firms.
3. Mergers should not increase the risk of coordination.
4. Mergers should not eliminate a potential entrant in a concentrated market.
5. Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.
6. Vertical mergers should not create market structures that foreclose competition.
7. Mergers should not entrench or extend a dominant position.
8. Mergers should not further a trend toward concentration.
9. When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series.
10. When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform.
11. When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers.
12. When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition.
13. Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

FTC and DOJ lay out rules for merger review to reflect digital economy (cnbc.com)

I was thinking before that 1 ground where I could have seen legit concern with the ABK deal is that the Bethesda deal was too recent to have an effective impact on markets making it harder to judge subsequent acquisition.

So to me, those new guidelines totally make sense on what they are trying to achieve, like if MS were to announce buying Take 2 the day they complete ABK they would create a context where the market did not still properly adjust to the new context so reviewing the deal notwithstanding the previous one would skew the result to the same conclusion in most case.

However, those guidelines are too vague,

  • What is the timeframe to be considered part of the same series of acquisitions?
  • What are the common characteristics that would make them so?
    • Like if MS buys a dev $500m dev can it be considered in the same series as a $70B publisher?
  • Would the FTC need to do a pre-investigation to assess what is the series?
  • Would the FTC offer the acquirer entity possibility to declare themselves a transaction as a part of a series in the notice of acquisition?
  • Would the FTC need to do a pre-investigation identifying the series it's a part of and be open to challenging those findings? 
  • Wouldn't this cause judge to adjudicate on the same transaction twice or would the judgement be made on the series but affect the last entry?
  • If a buyer acquisitions multiple smaller targets at once (like Xbox in 2018) will the transactions be judged independently but considering they're part of the same series?
    • If so what happens if a Judge issues a block for an acquisition by considering it part of a series and judging the series to give rise to an SLC, while another judge allows another transaction with the same series by Judging it isn't causing an SLC?