CDT Comments to DOJ & FTC on the Draft Vertical Merger Guidelines

A few years ago, a satirical ad ran as part of a Parks and Recreation episode. It announced the fictional merger of Verizon, Exxon, and Chipotle, three companies that, according to the ad, all give people energy in different ways. The fake ad ended with the tagline “Proud to be one of America’s 8 companies.”

It is against this backdrop of increasing consolidation and market power across many sectors of the American economy that we provide these comments on the Agencies’ draft vertical merger guidelines. The Center for Democracy & Technology is a non-profit advocacy organization working to promote democratic values online and in new, existing, and emerging technologies. We believe in the power of the internet, and we seek policy outcomes that keep the internet open and innovative.

We appreciate the Agencies’ efforts to update their guidance about vertical mergers. We submit, however, that the draft guidelines omit many important points. We urge the Agencies to consider adding additional commentary especially in the areas of (1) evidence of adverse competitive effects, (2) unilateral effects, and (3) efficiencies. In addition to those specific areas, we encourage the Agencies to add more illustrative examples and discussion of how they assess vertical mergers in data-intensive and tech-oriented industries.

In addition, these draft guidelines are styled as applying to vertical mergers. The earlier guidelines from the 1980s addressed “non-horizontal” mergers. The Agencies should explain in the final guidelines whether they apply only to vertical mergers or also to other forms of non-horizontal mergers. If these guidelines are not intended to apply to mergers that are not strictly vertical, the Agencies should publish additional guidelines that explain their approaches to non-horizontal, non-vertical mergers. This is of particular importance in the high tech space, where the lines separating horizontal, vertical, and conglomerate mergers can be difficult to draw.