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

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Judge approves T-Mobile-Sprint merger

Illustration: Aïda Amer/Axios

A federal judge allowed the merger of T-Mobile and Sprint to move forward in a Tuesday decision, ruling against a coalition of state attorneys general who fought against the deal.

Why it matters: The deal, announced back in April 2018, reduces the number of national carriers from four to three, but creates a much larger rival to AT&T and Verizon, and was seen as vital for Sprint, which has continued to lose market share during the deal's long approval process.

Go deeperArrowUpdated Feb 11, 2020 - Economy & Business

Feds' role chided as T-Mobile-Sprint trial wraps up

Photo: Justin Sullivan/Getty Images

The states trying to block the T-Mobile-Sprint merger in court got a boost this week from T-Mobile's home state as the litigation heads into closing arguments on Wednesday.

Driving the news: Washington state Attorney General Bob Ferguson, in a court filing this week, called out the Justice Department for attempting to "undermine the states' important and independent role in enforcing antitrust laws" in its efforts to convince the court to OK the deal.

Go deeperArrowJan 15, 2020

Hawley seeks overhaul of the Federal Trade Commission

Sen. Josh Hawley, (R-Mo.). Photo: Chip Somodevilla/Getty Images.

GOP Sen. Josh Hawley's frustration with the FTC's policing of the tech industry has prompted him to propose taking the more-than-100-year-old agency off of merger reviews and turning what remains into a wing of the Justice Department.

The big picture: The FTC has been under fire from both Republicans and Democrats calling for tougher action on Big Tech; Hawley's pitch is to hand the agency's competition authority to the DOJ's antitrust division so that a reimagined FTC could hone its focus on privacy and other digital issues.