Jan 13, 2020

Trump administration offers a new guide to vertical mergers

The Trump administration is telling companies what they're up against with the Justice Department and Federal Trade Commission if they embark on a merger similar to the AT&T-Time Warner deal, under new draft guidelines for so-called vertical mergers proposed Friday.

Why it matters: These new guidelines seek, for the first time since 1984, to formally lay out how regulators consider whether a vertical merger will hurt competition and should therefore be blocked.

  • The agencies have lengthy standards for reviewing horizontal mergers, in which a company buys a direct competitor.
  • The rules covering vertical mergers, where a company buys a supplier — such as a pay-TV provider buying a network — are shorter and haven't been updated in decades.

Details: Under the guidelines, a would-be vertical merger could be deemed harmful if there's evidence that it would help the buyer raise costs for competitors, shut rivals out of markets or access sensitive information that would give it a competitive edge.

Yes, but: The standards that the agencies are looking to codify with the new guidelines include some of the very factors the Justice Department used in trying to block the merger between distributor AT&T and content provider Time Warner. That case failed to convince a federal judge, and the companies closed their deal.

What they're saying: The FTC's two Democratic commissioners both said they're in favor of updating the vertical merger guidelines, but couldn't support the proposal as written.

  • Commissioner Rebecca Kelly Slaughter said in a statement that her "biggest concern" involves a note in the guidelines that regulators are unlikely to challenge mergers proposed by companies that control less than 20% of the market in which they operate.
  • Fellow Democrat Rohit Chopra said the proposed rules "clearly fall short" and should have included more metrics for weighing if a merger will hurt competition.

Between the lines: The cooperation between the two agencies comes at a time of some tension over the antitrust investigations of the major tech platforms and the Justice Department's weighing in against the FTC's case against Qualcomm. 

What’s next: The agencies are taking comments on the guidelines until Feb. 11. After that, they can move toward finalizing and adopting them.

Go deeper: T-Mobile's trial to close Sprint merger heads toward closing arguments

Go deeper

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Biden: George Floyd's last words are "a wake-up call for our nation"

Former Vice President Joe Biden meets with clergy members and community activists during a visit to Bethel AME Church in Wilmington, Del. on June 1, 2020. Photo: JIM WATSON/AFP via Getty Images

Vice President Joe Biden is calling George Floyd’s dying words “a wake-up call for our nation,” and criticized President Trump’s decision to unleash tear gas on peaceful protesters outside the White House, in a civil rights speech from Philadelphia on Tuesday.

Why it matters: Biden in the address drew a sharp contrast between himself and Trump, whose first remarks addressing nationwide unrest Monday highlighted law and order, extreme demonstrations of militarized “strength” and other blustery threats.

Updated 32 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 11 a.m. ET: 6,302,318 — Total deaths: 376,322 — Total recoveries — 2,716,924Map.
  2. U.S.: Total confirmed cases as of 11 a.m. ET: 1,812,125 — Total deaths: 105,192 — Total recoveries: 458,231 — Total tested: 17,340,682Map.
  3. Public health: Protests against police brutality threaten coronavirus response.
  4. Business: Coronavirus could lower GDP by $15.7 trillion — More than 1 in 6 black workers lost jobs between February and April.
  5. Climate: The alarm over climate financial risk gets louder because of coronavirus.
  6. Media: Interest in the George Floyd protests has soared past the coronavirus.

The business of tear gas

Illustration: Eniola Odetunde/Axios

U.S. forces yesterday used tear gas on peaceful protesters outside the White House gates, prior to a declared curfew, clearing a path for President Trump to visit a riot-damaged church for a photo opportunity.

The state of play: Two of the largest U.S. producers of tear gas are owned by private equity firms, but those firms have no interest in discussing their ownership.