WASHINGTON (AP) – U.S. competition authorities have sought to tighten enforcement of illegal mergers, in line with President Joe Biden’s mandate to scrutinize large corporate mergers.
The Justice Department and Federal Trade Commission announced Tuesday that they are soliciting public comment on how current merger guidelines may be updated to better detect and deter illegal and anticompetitive deals in an increasingly consolidating corporate market. The agencies stress the importance of robust competition for business, workers, consumers and small businesses.
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“Our country depends on competition to fuel progress, innovation and prosperity,” said Assistant Attorney General Jonathan Kanter, who heads the Justice Department’s antitrust division. “We need to understand why so many industries have too few competitors and think carefully about how to ensure our merger enforcement tools are fit for purpose in the modern economy.”
In demanding public opinion on mergers, regulators seek a broader definition of anti-competitive behavior. They said they are interested in aspects of competition that current merger guidelines may overlook, such as the impact on labor markets and other non-price issues such as innovation and quality. Regulators are also looking for concrete examples of mergers that have hurt competition.
“Today, the DOJ and FTC should begin realigning the US government toward liberty and just democracy. The government’s antimonopoly policies represent a critical statement of how regulators view the nature of power,” Barry Lynn, executive director of the Open Markets Institute, said in a statement. The group advocates stricter antitrust regulation.
The trend towards concentration began with a merger boom in American companies in the 1980s that fattened the profits of the dominant companies. Decisions by both Democratic and Republican governments over the past 15 years have allowed most major mergers to sail through.
Regulators noted on Tuesday that the ongoing wave of mergers was reflected in companies’ approval requests to regulators, which more than doubled from 2020 to 2021.
The latest high-profile merger proposal landed on Tuesday with news that Microsoft is paying nearly $70 billion for Activision Blizzard, makers of Candy Crush and Call of Duty, as it gives it an advantage in the highly competitive mobile gaming and virtual reality businesses seeks technology.
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The $68.7 billion deal is subject to scrutiny by US and European regulators in the coming months. If approved, it would make Microsoft, the maker of the Xbox gaming system, one of the world’s largest video game companies.
Biden issued a sweeping executive order in July that highlighted outsized market power in industries like big tech, healthcare, airlines and agriculture. Biden said the measures he is asking for would lower prices for families, raise wages for workers and encourage innovation and faster economic growth. The mandate includes 72 measures and recommendations for federal agencies that need to translate their policies into rules.
As fewer and larger players control more diverse markets, prices that exceed companies’ costs have tripled, according to the White House, resulting in higher prices for families for necessities like prescription drugs, hearing aids and internet services.
Tuesday’s announcement was made by Kanter and Lina Khan, the head of the FTC. Kanter, an antitrust attorney who has spoken out against giant tech companies in private practice, took over the judiciary’s antitrust division in November. Khan, who became head of the FTC in June, was an outspoken critic of big tech before entering government.
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Kanter is likely to continue pursuing a landmark antitrust case against Google, filed by Trump’s Justice Department in October 2020, accusing the company of abusing its dominance in online search and advertising.
The FTC, meanwhile, is pursuing an antitrust lawsuit against Facebook, now called Meta, alleging that the tech giant is a monopoly in the social networking market. The agency is looking at remedies, which could include a forced spin-off of the company’s popular messaging services Instagram and WhatsApp, or a general restructuring.
In a major antitrust case, the Justice Department sued in November to prevent German media giant Bertelsmann’s proposed $2.2 billion acquisition of Simon & Schuster from Penguin Random House, already the largest US book publisher. Regulators said industry consolidation would hurt authors and ultimately readers because Penguin Random House has “outrageous influence” over what books are published in the US and how much authors are paid.
In another lawsuit last fall, the Justice Department challenged American Airlines’ partnership with JetBlue, claiming it could bring higher fares.
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