# U.S. Department of Justice and the Federal Trade Commission (2023)

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URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A6c5037653525d3dc

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

Merger Guidelines
U.S. Department of Justice and the Federal Trade Commission

Issued: December 18, 2023

1. Overview
These Merger Guidelines identify the procedures and enforcement practices the Department of
Justice and the Federal Trade Commission (the “Agencies”) most often use to investigate whether
mergers violate the antitrust laws. The Agencies enforce the federal antitrust laws, specifically Sections
1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2; Section 5 of the Federal Trade Commission Act, 15
U.S.C. § 45; and Sections 3, 7, and 8 of the Clayton Act,1 15 U.S.C. §§ 14, 18, 19.2 Congress has
charged the Agencies with administering these statutes as part of a national policy to promote open and
fair competition, including by preventing mergers and acquisitions that would violate these laws.
“Federal antitrust law is a central safeguard for the Nation’s free market structures” that ensures “the
preservation of economic freedom and our free-enterprise system.” 3 It rests on the premise that “[t]he
unrestrained interaction of competitive forces will yield the best allocation of our economic resources,
the lowest prices, the highest quality and the greatest material progress, while at the same time providing
an environment conducive to the preservation of our democratic political and social institutions.” 4
Section 7 of the Clayton Act (“Section 7”) prohibits mergers and acquisitions where “in any line
of commerce or in any activity affecting commerce in any section of the country, the effect of such
acquisition may be substantially to lessen competition, or to tend to create a monopoly.” Competition is
a process of rivalry that incentivizes businesses to offer lower prices, improve wages and working
conditions, enhance quality and resiliency, innovate, and expand choice, among many other benefits.
Mergers that substantially lessen competition or tend to create a monopoly increase, extend, or entrench
market power and deprive the public of these benefits. Mergers can lessen competition when they
diminish competitive constraints, reduce the number or attractiveness of alternatives available to trading
partners, or reduce the intensity with which market participants compete.
Section 7 was designed to arrest anticompetitive tendencies in their incipiency. 5 The Clayton Act
therefore requires the Agencies to assess whether mergers present risk to competition. The Supreme
Court has explained that “Section 7 itself creates a relatively expansive definition of antitrust liability:
To show that a merger is unlawful, a plaintiff need only prove that its effect ‘may be substantially to
lessen competition’” or to tend to create a monopoly. 6 Accordingly, the Agencies do not attempt to

1

As amended under the Celler-Kefauver Antimerger Act of 1950, Pub. L. No. 81-899, 64 Stat. 1125 (1950), and the HartScott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. § 18a.
2
Although these Guidelines focus primarily on Section 7 of the Clayton Act, the Agencies consider whether any of these
statutes may be violated by a merger. The various provisions of the Sherman, Clayton, and FTC Acts each have separate
standards, and one may be violated when the others are not.
3
North Carolina State Bd. of Dental Examiners v. FTC, 574 U.S. 494, 502 (2015).
4
NCAA v. Board of Regents, 468 U.S. 85, 104 n.27 (1984) (quoting Northern Pac. R. Co. v. United States, 356 U.S. 1, 4-5
(1958)); see also NCAA v. Alston, 141 S. Ct. 2141, 2147 (2021) (quoting Board of Regents, 468 U.S. at 104 n.27).
5
See, e.g., Brown Shoe Co. v. United States, 370 U.S. 294, 318 nn.32-33 (1962); see also United States v. AT&T, Inc., 916
F.3d 1029, 1032 (D.C. Cir. 2019) (Section 7 “halt[s] incipient monopolies and trade restraints outside the scope of the
Sherman Act.” (quoting Brown Shoe, 370 U.S. at 318 n.32)); Saint Alphonsus Medical Center-Nampa v. St. Luke’s, 778 F.3d
775, 783 (9th Cir. 2015) (Section 7 “intended to arrest anticompetitive tendencies in their incipiency.” (quoting Brown Shoe,
370 U.S. at 322)); Polypore Intern., Inc. v. FTC, 686 F.3d 1208, 1213-14 (11th Cir. 2012) (same). Some other aspects of
Brown Shoe have been subsequently revisited.
6
California v. Am. Stores Co., 495 U.S. 271, 284 (1990) (quoting 15 U.S.C. § 18 with emphasis) (citing Brown Shoe, 370
U.S. at 323).

1

predict the future or calculate precise effects of a merger with certainty. Rather, the Agencies examine
the totality of the evidence available to assess the risk the merger presents.
Competition presents itself in myriad ways. To assess the risk of harm to competition in a
dynamic and complex economy, the Agencies begin the analysis of a proposed merger by asking: how
do firms in this industry compete, and does the merger threaten to substantially lessen competition or to
tend to create a monopoly?
The Merger Guidelines set forth several different analytical frameworks (referred to herein as
“Guidelines”) to assist the Agencies in assessing whether a merger presents sufficient risk to warrant an
enforcement action. These frameworks account for industry-specific market realities and use a variety of
indicators and tools, ranging from market structure to direct evidence of the effect on competition, to
examine whether the proposed merger may harm competition.
How to Use These Guidelines: When companies propose a merger that raises concerns under
one or more Guidelines, the Agencies closely examine the evidence to determine if the facts are
sufficient to infer that the effect of the merger may be to substantially lessen competition or to tend to
create a monopoly (sometimes referred to as a “prima facie case”). 7 Section 2 describes how the
Agencies apply these Guidelines. Specifically, Guidelines 1-6 describe distinct frameworks the
Agencies use to identify that a merger raises prima facie concerns, and Guidelines 7-11 explain how to
apply those frameworks in several specific settings. In all of these situations, the Agencies will also
examine relevant evidence to determine if it disproves or rebuts the prima facie case and shows that the
merger does not in fact threaten to substantially lessen competition or tend to create a monopoly.
Section 3 identifies rebuttal evidence that the Agencies consider, and that merging parties can present,
to rebut an inference of potential harm under these frameworks. 8 Section 4 sets forth a non-exhaustive
discussion of analytical, economic, and evidentiary tools the Agencies use to evaluate facts, understand
the risk of harm to competition, and define relevant markets.
These Guidelines are not mutually exclusive, as a single transaction can have multiple effects or
raise concerns in multiple ways. To promote efficient review, for any given transaction the Agencies
may limit their analysis to any one Guideline or subset of Guidelines that most readily demonstrates the
risks to competition from the transaction.
Guideline 1: Mergers Raise a Presumption of Illegality When They Significantly Increase
Concentration in a Highly Concentrated Market. Market concentration is often a useful indicator of a
merger’s likely effects on competition. The Agencies therefore presume, unless sufficiently disproved or
rebutted, that a merger between competitors that significantly increases concentration and creates or
further consolidates a highly concentrated market may substantially lessen competition.
Guideline 2: Mergers Can Violate the Law When They Eliminate Substantial Competition
Between Firms. The Agencies examine whether competition between the merging parties is substantial
since their merger will necessarily eliminate any competition between them.
7

See, e.g., United States v. AT&T, Inc., 916 F.3d at 1032 (explaining that a prima facie case can demonstrate a “reasonable
probability” of harm to competition either through “statistics about the change in market concentration” or a “fact-specific”
showing (quoting Brown Shoe, 370 U.S. at 323 n.39)); United States v. Baker Hughes, 908 F.2d 981, 982-83 (D.C. Cir. 1990).
8
These Guidelines pertain only to the Agencies’ consideration of whether a merger or acquisition may substantially lessen
competition or tend to create a monopoly. The consideration of remedies appropriate for mergers that pose that risk is beyond
the Merger Guidelines’ scope. The Agencies review proposals to revise a merger in order to alleviate competitive concerns
consistent with applicable law regarding remedies.

2

Guideline 3: Mergers Can Violate the Law When They Increase the Risk of Coordination. The
Agencies examine whether a merger increases the risk of anticompetitive coordination. A market that is
highly concentrated or has seen prior anticompetitive coordination is inherently vulnerable and the
Agencies will infer, subject to rebuttal evidence, that the merger may substantially lessen competition.
In a market that is not highly concentrated, the Agencies investigate whether facts suggest a greater risk
of coordination than market structure alone would suggest.
Guideline 4: Mergers Can Violate the Law When They Eliminate a Potential Entrant in a
Concentrated Market. The Agencies examine whether, in a concentrated market, a merger would (a)
eliminate a potential entrant or (b) eliminate current competitive pressure from a perceived potential
entrant.
Guideline 5: Mergers Can Violate the Law When They Create a Firm That May Limit Access to
Products or Services That Its Rivals Use to Compete. When a merger creates a firm that can limit
access to products or services that its rivals use to compete, the Agencies examine the extent to which
the merger creates a risk that the merged firm will limit rivals’ access, gain or increase access to
competitively sensitive information, or deter rivals from investing in the market.
Guideline 6: Mergers Can Violate the Law When They Entrench or Extend a Dominant Position.
The Agencies examine whether one of the merging firms already has a dominant position that the
merger may reinforce, thereby tending to create a monopoly. They also examine whether the merger
may extend that dominant position to substantially lessen competition or tend to create a monopoly in
another market.
Guideline 7: When an Industry Undergoes a Trend Toward Consolidation, the Agencies Consider
Whether It Increases the Risk a Merger May Substantially Lessen Competition or Tend to Create
a Monopoly. A trend toward consolidation can be an important factor in understanding the risks to
competition presented by a merger. The Agencies consider this evidence carefully when applying the
frameworks in Guidelines 1-6.
Guideline 8: When a Merger is Part of a Series of Multiple Acquisitions, the Agencies May
Examine the Whole Series. If an individual transaction is part of a firm’s pattern or strategy of multiple
acquisitions, the Agencies consider the cumulative effect of the pattern or strategy when applying the
frameworks in Guidelines 1-6.
Guideline 9: When a Merger Involves a Multi-Sided Platform, the Agencies Examine Competition
Between Platforms, on a Platform, or to Displace a Platform. Multi-sided platforms have
characteristics that can exacerbate or accelerate competition problems. The Agencies consider the
distinctive characteristics of multi-sided platforms when applying the frameworks in Guidelines 1-6.
Guideline 10: When a Merger Involves Competing Buyers, the Agencies Examine Whether It May
Substantially Lessen Competition for Workers, Creators, Suppliers, or Other Providers. The
Agencies apply the frameworks in Guidelines 1-6 to assess whether a merger between buyers, including
employers, may substantially lessen competition or tend to create a monopoly.
Guideline 11: When an Acquisition Involves Partial Ownership or Minority Interests, the
Agencies Examine Its Impact on Competition. The Agencies apply the frameworks in Guidelines 1-6
to assess if an acquisition of partial control or common ownership may substantially lessen competition.
*

*

*
3

This edition of the Merger Guidelines consolidates, revises, and replaces the various versions of
Merger Guidelines previously issued by the Agencies. The revision builds on the learning and
experience reflected in those prior Guidelines and successive revisions. These Guidelines reflect the
collected experience of the Agencies over many years of merger review in a changing economy and
have been refined through an extensive public consultation process.
As a statement of the Agencies’ law enforcement procedures and practices, the Merger
Guidelines create no independent rights or obligations, do not affect the rights or obligations of private
parties, and do not limit the discretion of the Agencies, including their staff, in any way. Although the
Merger Guidelines identify the factors and frameworks the Agencies consider when investigating
mergers, the Agencies’ enforcement decisions will necessarily continue to require prosecutorial
discretion and judgment. Because the specific standards set forth in these Merger Guidelines will be
applied to a broad range of factual circumstances, the Agencies will apply them reasonably and flexibly
to the specific facts and circumstances of each merger.
Similarly, the factors contemplated in these Merger Guidelines neither dictate nor exhaust the
range of theories or evidence that the Agencies may introduce in merger litigation. Instead, they set forth
various methods of analysis that may be applicable depending on the availability and/or reliability of
information related to a given market or transaction. Given the variety of industries, market participants,
and acquisitions that the Agencies encounter, merger analysis does not consist of uniform application of
a single methodology. The Agencies assess any relevant and meaningful evidence to evaluate whether
the effect of a merger may be substantially to lessen competition or to tend to create a monopoly.
Merger review is ultimately a fact-specific exercise. The Agencies follow the facts and the law in
analyzing mergers as they do in other areas of law enforcement.
These Merger Guidelines include references to applicable legal precedent. References to court
decisions do not necessarily suggest that the Agencies would analyze the facts in those cases identically
today. While the Agencies adapt their analytical tools as they evolve and advance, legal holdings
reflecting the Supreme Court’s interpretation of a statute apply unless subsequently modified. These
Merger Guidelines therefore reference applicable propositions of law to explain core principles that the
Agencies apply in a manner consistent with modern analytical tools and market realities. References
herein do not constrain the Agencies’ interpretation of the law in particular cases, as the Agencies will
apply their discretion with respect to the applicable law in each case in light of the full range of
precedent pertinent to the issues raised by each enforcement action.

4

2. Applying the Merger Guidelines
This section discusses the frameworks the Agencies use to assess whether a merger may
substantially lessen competition or tend to create a monopoly.

2.1.

Guideline 1: Mergers Raise a Presumption of Illegality When They
Significantly Increase Concentration in a Highly Concentrated Market.

Market concentration and the change in concentration due to the merger are often useful
indicators of a merger’s risk of substantially lessening competition. In highly concentrated markets, a
merger that eliminates a significant competitor creates significant risk that the merger may substantially
lessen competition or tend to create a monopoly. As a result, a significant increase in concentration in a
highly concentrated market can indicate that a merger may substantially lessen competition, depriving
the public of the benefits of competition.
The Supreme Court has endorsed this view and held that “a merger which produces a firm
controlling an undue percentage share of the relevant market, and results in a significant increase in the
concentration of firms in that market[,] is so inherently likely to lessen competition substantially that it
must be enjoined in the absence of [rebuttal] evidence.” 9 In the Agencies’ experience, this legal
presumption provides a highly administrable and useful tool for identifying mergers that may
substantially lessen competition.
An analysis of concentration involves calculating pre-merger market shares of products 10 within
a relevant market (see Section 4.3 for a discussion of market definition and Section 4.4 for more details
on computing market shares). The Agencies assess whether the merger creates or further consolidates a
highly concentrated market and whether the increase in concentration is sufficient to indicate that the
merger may substantially lessen competition or tend to create a monopoly. 11
The Agencies generally measure concentration levels using the Herfindahl-Hirschman Index
(“HHI”).12 The HHI is defined as the sum of the squares of the market shares; it is small when there are
many small firms and grows larger as the market becomes more concentrated, reaching 10,000 in a
market with a single firm. Markets with an HHI greater than 1,800 are highly concentrated, and a change
of more than 100 points is a significant increase. 13 A merger that creates or further consolidates a highly

9

United States v. Phila. Nat’l Bank, 374 U.S. 321, 363 (1963); see, e.g., FTC v. v. Hackensack Meridian Health, Inc., 30
F.4th 160, 172-73 (3d Cir. 2022); United States v. AT&T, Inc., 916 F.3d at 1032.
10
These Guidelines use the term “products” to encompass anything that is traded between firms and their suppliers,
customers, or business partners, including physical goods, services, or access to assets. Products can be as narrow as an
individual brand, a specific version of a product, or a product that includes specific ancillary services such as the right to
return it without cause or delivery to the customer’s location.
11
Typically, a merger eliminates a competitor by bringing two market participants under common control. Similar concerns
arise if the merger threatens to cause the exit of a current market participant, such as a leveraged buyout that puts the target
firm at significant risk of failure.
12
The Agencies may instead measure market concentration using the number of significant competitors in the market. This
measure is most useful when there is a gap in market share between significant competitors and smaller rivals or when it is
difficult to measure shares in the relevant market.
13
For illustration, the HHI for a market of five equal firms is 2,000 (5 x 20 2 = 2,000) and for six equal firms is 1,667 (6 x
16.672 = 1667).

5

concentrated market that involves an increase in the HHI of more than 100 points 14 is presumed to
substantially lessen competition or tend to create a monopoly. 15 The Agencies also may examine the
market share of the merged firm: a merger that creates a firm with a share over thirty percent is also
presumed to substantially lessen competition or tend to create a monopoly if it also involves an increase
in HHI of more than 100 points.16
Indicator

Threshold for Structural Presumption
Market HHI greater than 1,800

Post-merger HHI

AND
Change in HHI greater than 100
Share greater than 30%

Merged Firm’s Market Share

AND
Change in HHI greater than 100

When exceeded, these concentration metrics indicate that a merger’s effect may be to eliminate
substantial competition between the merging parties and may be to increase coordination among the
remaining competitors after the merger. This presumption of illegality can be rebutted or disproved. The
higher the concentration metrics over these thresholds, the greater the risk to competition suggested by
this market structure analysis and the stronger the evidence needed to rebut or disprove it.

2.2.

Guideline 2: Mergers Can Violate the Law When They Eliminate
Substantial Competition Between Firms.

A merger eliminates competition between the merging firms by bringing them under joint
control.17 If evidence demonstrates substantial competition between the merging parties prior to the
14

The change in HHI from a merger of firms with shares a and b is equal to 2ab. For example, in a merger between a firm
with 20% market share and a firm with 5% market share, the change in HHI is 2 x 20 x 5 = 200.
15
The first merger guidelines to reference an HHI threshold were the merger guidelines issued in 1982. These guidelines
referred to mergers with HHI above 1,000 as concentrated markets, with HHI between 1,000 and 1,800 as “moderately
concentrated” and above 1,800 as “highly concentrated,” while they referred to an increase in HHI of 100 as a “significant
increase.” Each subsequent iteration until 2010 maintained those thresholds. See Fed. Trade Comm’n & U.S. Dep’t of Justice,
Horizontal Merger Guidelines § 1.51 (1997); Fed. Trade Comm’n & U.S. Dep’t of Justice, Horizontal Merger Guidelines
§ 1.51 (1992); U.S. Dep’t of Justice, Merger Guidelines § 3(A) (1982). During this time, courts routinely cited to the
guidelines and these HHI thresholds in decisions. See, e.g., Chicago Bridge & Iron Co. N.V. v. FTC, 534 F.3d 410, 431 (5th
Cir. 2008); FTC v. H.J. Heinz Co., 246 F.3d 708, 716 (D.C. Cir. 2001); FTC v. Univ. Health, Inc., 938 F.2d 1206, 1211 (11th
Cir. 1991). Although the Agencies raised the thresholds for the 2010 guidelines, based on experience and evidence developed
since, the Agencies consider the original HHI thresholds to better reflect both the law and the risks of competitive harm
suggested by market structure and have therefore returned to those thresholds.
16
Phila. Nat’l Bank, 374 U.S. at 364-65 (“Without attempting to specify the smallest market share which would still be
considered to threaten undue concentration, we are clear that 30% presents that threat.”).
17
The competitive harm from the elimination of competition between the merging firms, without considering the risk of
coordination, is sometimes referred to as unilateral effects. The elimination of competition between the merging firms can
also lessen competition with and among other competitors. When the elimination of competition between the merging firms

6

merger, that ordinarily suggests that the merger may substantially lessen competition. 18Although a
change in market structure can also indicate risk of competitive harm (see Guideline 1), an analysis of
the existing competition between the merging firms can demonstrate that a merger threatens competitive
harm independent from an analysis of market shares.
Competition often involves firms trying to win business by offering lower prices, new or better
products and services, more attractive features, higher wages, improved benefits, or better terms relating
to various additional dimensions of competition. This can include competition to research and develop
products or services, and the elimination of such competition may result in harm even if such products
or services are not yet commercially available. The more the merging parties have shaped one another’s
behavior, or have affected one another’s sales, profits, valuation, or other drivers of behavior, the more
significant the competition between them.
The Agencies examine a variety of indicators to identify substantial competition. For example:
Strategic Deliberations or Decisions. The Agencies may analyze the extent of competition
between the merging firms by examining evidence relating to strategic deliberations or decisions in the
regular course of business. For example, in some markets, the firms may monitor each other’s pricing,
marketing campaigns, facility locations, improvements, products, capacity, output, input costs, and/or
innovation plans. This can provide evidence of competition between the merging firms, especially when
they react by taking steps to preserve or enhance the competitiveness or profitability of their own
products or services.
Prior Merger, Entry, and Exit Events. The Agencies may look to historical events to assess the
presence and substantiality of direct competition between the merging firms. For example, the Agencies
may examine the competitive impact of recent relevant mergers, entry, expansion, or exit events.
Customer Substitution. Customers’ willingness to switch between different firms’ products is an
important part of the competitive process. Firms are closer competitors the more that customers are
willing to switch between their products. The Agencies use a variety of tools, detailed in Section 4.2, to
assess customer substitution.
Impact of Competitive Actions on Rivals. When one firm takes competitive actions to attract
customers, this can benefit the firm at the expense of its rivals. The Agencies may gauge the extent of
competition between the merging firms by considering the impact that competitive actions by one of the
merging firms has on the other merging firm. The impact of a firm’s competitive actions on a rival is
generally greater when customers consider the firm’s products and the rival’s products to be closer
substitutes, so that a firm’s competitive action results in greater lost sales for the rival, and when the
profitability of the rival’s lost sales is greater.
Impact of Eliminating Competition Between the Firms. In some instances, evidence may be
available to assess the impact of competition from one firm on the other’s actions, such as firm choices
leads them to compete less aggressively with one another, other firms in the market can in turn compete less aggressively,
decreasing the overall intensity of competition.
18
See also United States v. First Nat’l Bank & Trust Co. of Lexington, 376 U.S. 665, 669-70 (1964) (per curiam) (“[I]t [is]
clear that the elimination of significant competition between [merging parties] constitutes an unreasonable restraint of trade
in violation of § 1 of the Sherman Act. . . . It [can be] enough that the two . . . compete[], that their competition [is] not
insubstantial and that the combination [would] put an end to it.”); ProMedica Health Sys., Inc. v. FTC, 749 F.3d 559, 568-70
(6th Cir. 2014), cert. denied, 575 U.S. 996 (2015).

7

about price, quality, wages, or another dimension of competition. Section 4.2 describes a variety of
approaches to measuring such impacts.
Additional Evidence, Tools, and Metrics. The Agencies may use additional evidence, tools, and
metrics to assess the loss of competition between the firms. Depending on the realities of the market,
different evidence, tools, or metrics may be appropriate.
Section 4.2 provides additional detail about the approaches that the Agencies use to assess
competition between or among firms.

2.3.

Guideline 3: Mergers Can Violate the Law When They Increase the
Risk of Coordination.

The Agencies determine that a merger may substantially lessen competition when it
meaningfully increases the risk of coordination among the remaining firms in a relevant market or
makes existing coordination more stable or effective.19 Firms can coordinate across any or all
dimensions of competition, such as price, product features, customers, wages, benefits, or geography.
Coordination among rivals lessens competition whether it occurs explicitly—through collusive
agreements between competitors not to compete or to compete less—or tacitly, through observation and
response to rivals. Because tacit coordination often cannot be addressed under Section 1 of the Sherman
Act, the Agencies vigorously enforce Section 7 of the Clayton Act to prevent market structures
conducive to such coordination.
Tacit coordination can lessen competition even when it does not rise to the level of an agreement
and would not itself violate the law. For example, in a concentrated market a firm may forego or soften
an aggressive competitive action because it anticipates rivals responding in kind. This harmful behavior
is more common the more concentrated markets become, as it is easier to predict the reactions of rivals
when there are fewer of them.
To assess the extent to which a merger may increase the likelihood, stability, or effectiveness of
coordination, the Agencies often consider three primary factors and several secondary factors. The
Agencies may consider additional factors depending on the market.
2.3.A. Primary Factors
The Agencies may conclude that post-merger market conditions are susceptible to coordinated
interaction and that the merger materially increases the risk of coordination if any of the three primary
factors are present.
Highly Concentrated Market. By reducing the number of firms in a market, a merger increases
the risk of coordination. The fewer the number of competitively meaningful rivals prior to the merger,
the greater the likelihood that merging two competitors will facilitate coordination. Markets that are
highly concentrated after a merger that significantly increases concentration (see Guideline 1) are
presumptively susceptible to coordination. If merging parties assert that a highly concentrated market is
not susceptible to coordination, the Agencies will assess this rebuttal evidence using the framework

19

See Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 229-30 (1993) (“In the § 7 context, it has long
been settled that excessive concentration, and the oligopolistic price coordination it portends, may be the injury to
competition the Act prohibits.”).

8

described below. Where a market is not highly concentrated, the Agencies may still consider other risk
factors.
Prior Actual or Attempted Attempts to Coordinate. Evidence that firms representing a
substantial share in the relevant market appear to have previously engaged in express or tacit
coordination to lessen competition is highly informative as to the market’s susceptibility to coordination.
Evidence of failed attempts at coordination in the relevant market suggest that successful coordination
was not so difficult as to deter attempts, and a merger reducing the number of rivals may tend to make
success more likely.
Elimination of a Maverick. A maverick is a firm with a disruptive presence in a market. The
presence of a maverick, however, only reduces the risk of coordination so long as the maverick retains
the disruptive incentives that drive its behavior. A merger that eliminates a maverick or significantly
changes its incentives increases the susceptibility to coordination.
2.3.B. Secondary Factors
The Agencies also examine whether secondary factors demonstrate that a merger may
meaningfully increase the risk of coordination, even absent the primary risk factors. Not all secondary
factors must be present for a market to be susceptible to coordination.
Market Concentration. Even in markets that are not highly concentrated, coordination becomes
more likely as concentration increases. The more concentrated a market, the more likely the Agencies
are to conclude that the market structure suggests susceptibility to coordination.
Market Observability. A market is more susceptible to coordination if a firm’s behavior can be
promptly and easily observed by its rivals. Rivals’ behavior is more easily observed when the terms
offered to customers are readily discernible and relatively observable (that is, known to rivals).
Observability can refer to the ability to observe prices, terms, the identities of the firms serving
particular customers, or any other competitive actions of other firms. Information exchange
arrangements among market participants, such as public exchange of information through
announcements or private exchanges through trade associations or publications, increase market
observability. Regular monitoring of one another’s prices or customers can indicate that the terms
offered to customers are relatively observable. Pricing algorithms, programmatic pricing software or
services, and other analytical or surveillance tools that track or predict competitor prices or actions
likewise can increase the observability of the market.
Competitive Responses. A market is more susceptible to coordination if a firm’s prospective
competitive reward from attracting customers away from its rivals will be significantly diminished by its
rivals’ likely responses. This is more likely to be the case the stronger and faster the responses from its
rivals because such responses reduce the benefits of competing more aggressively. Some factors that
increase the likelihood of strong or rapid responses by rivals include: (1) the market has few significant
competitors, (2) products in the relevant market are relatively homogeneous, (3) customers find it
relatively easy to switch between suppliers, (4) suppliers use algorithmic pricing, or (5) suppliers use
meeting-competition clauses. The more predictable are rivals’ responses to strategic actions or changing
competitive conditions, and the more interactions firms have across multiple markets, the greater the
susceptibility to coordination.
Aligned Incentives. Removing a firm that has different incentives from most other firms in a
market can increase the risk of coordination. For example, a firm with a small market share may have
9

less incentive to coordinate because it has more to gain from winning new business than other firms. The
same issue can arise when a merger more closely aligns one or both merging firms’ incentives with the
other firms in the market. In some cases, incentives might be aligned or strengthened when firms
compete with one another in multiple markets (“multi-market contact”). For example, firms might
compete less aggressively in some markets in anticipation of reciprocity by rivals in other markets. The
Agencies examine these and any other market realities that suggest aligned incentives increase
susceptibility to coordination.
Profitability or Other Advantages of Coordination for Rivals. The Agencies regard coordinated
interaction as more likely to occur when participants in the market stand to gain more from successful
coordination. Coordination generally is more profitable or otherwise advantageous for the coordinating
firms the less often customers substitute outside the market when firms offer worse terms.
Rebuttal Based on Structural Barriers to Coordination Unique to the Industry. When market
structure evidence suggests that a merger may substantially lessen competition through coordination, the
merging parties sometimes argue that anticompetitive coordination is nonetheless impossible due to
structural market barriers to coordinating. The Agencies consider this rebuttal evidence using the
framework in Section 3. In so doing, the Agencies consider whether structural market barriers to
coordination are “so much greater in the [relevant] industry than in other industries that they rebut the
normal presumption” of coordinated effects. 20 In the Agencies’ experience, structural conditions that
prevent coordination are exceedingly rare in the modern economy. For example, coordination is more
difficult when firms are unable to observe rivals’ competitive offerings, but technological change has
made this situation less common than in the past and reduced many traditional barriers or obstacles to
observing the behavior of rivals in a market. The greater the level of concentration in the relevant
market, the greater must be the structural barriers to coordination in order to show that no substantial
lessening of competition is threatened.

2.4.

Guideline 4: Mergers Can Violate the Law When They Eliminate a
Potential Entrant in a Concentrated Market.

Mergers can substantially lessen competition by eliminating a potential entrant. For instance, a
merger can eliminate the possibility that entry or expansion by one or both firms would have resulted in
new or increased competition in the market in the future. A merger can also eliminate current
competitive pressure exerted on other market participants by the mere perception that one of the firms
might enter. Both of these risks can be present simultaneously.
A merger that eliminates a potential entrant into a concentrated market can substantially lessen
competition or tend to create a monopoly. 21 The more concentrated the market, the greater the
magnitude of harm to competition from any lost potential entry and the greater the tendency to create a
monopoly. Accordingly, for mergers involving one or more potential entrants, the higher the market
concentration, the lower the probability of entry that gives rise to concern.

20

See H.J. Heinz Co., 246 F.3d at 724.
United States v. Marine Bancorp., 418 U.S. 602, 630 (1974). A concentrated market is one with an HHI greater than 1,000
(See Guideline 1, n.15).
21

10

2.4.A. Actual Potential Competition: Eliminating Reasonably Probable Future Entry
In general, expansion into a concentrated market via internal growth rather than via acquisition
benefits competition.22 Merging a current and a potential market participant eliminates the possibility
that the potential entrant would have entered on its own—entry that, had it occurred, would have
provided a new source of competition in a concentrated market.
To determine whether an acquisition that eliminates a potential entrant into a concentrated
market may substantially lessen competition,23 the Agencies examine (1) whether one or both24 of the
merging firms had a reasonable probability of entering the relevant market other than through an
anticompetitive merger, and (2) whether such entry offered a substantial likelihood of ultimately
producing deconcentration of the market or other significant procompetitive effects. 25
Reasonable Probability of Entry. The Agencies’ starting point for assessment of a reasonable
probability of entry is objective evidence regarding the firm’s available feasible means of entry,
including its capabilities and incentives. Relevant objective evidence can include, for example, evidence
that the firm has sufficient size and resources to enter; evidence of any advantages that would make the
firm well-situated to enter; evidence that the firm has successfully expanded into similarly situated
markets in the past or already participates in adjacent or related markets; evidence that the firm has an
incentive to enter; or evidence that industry participants recognize the company as a potential entrant.
This analysis is not limited to whether the company could enter with its pre-merger production facilities,
but also considers overall capability, which can include the ability to expand or add to its capabilities on
its own or in collaboration with someone other than the acquisition target.
Subjective evidence that the company considered entering absent the merger can also indicate a
reasonable probability that the company would have entered without the merger. Subjective evidence
that the company considered organic entry as an alternative to merging generally suggests that, absent
the merger, entry would be reasonably probable.
Likelihood of Deconcentration or Other Significant Procompetitive Effects. New entry can
yield a variety of procompetitive effects, including increased output or investment, higher wages or
improved working conditions, greater innovation, higher quality, and lower prices. If the merging firm
had a reasonable probability of entering a highly concentrated relevant market, this suggests benefits
that would have resulted from its entry would be competitively significant, unless there is substantial
direct evidence that the competitive effect would be de minimis. To supplement the suggestion that new
entry yields procompetitive effects, the Agencies will consider projections of the potential entrant’s
22

See Ford Motor Co. v. United States, 405 U.S. 562, 587 (1972) (referring to the “typical[]” competitive concern when “a
potential entrant enters an oligopolistic market by acquisition rather than internal expansion” as being “that such a move has
deprived the market of the pro-competitive effect of an increase in the number of competitors”).
23
Harm from the elimination of a potential entrant can occur in markets that do not yet consist of commercial products, even
if the market concentration of the future market cannot be measured using traditional means. Where there are few equivalent
potential entrants, including one or both of the merging firms, that indicates that the future market, once commercialized, will
be concentrated. The Agencies will consider other potential entrants’ capabilities and incentives in comparison to the merging
potential entrant to assess equivalence.
24
United States v. Penn-Olin Chemical Co., 378 U.S. 158 (1964) (holding that a merger between two firms, each or both of
which might have entered the relevant market, could violate Section 7).
25
See id. at 175-76; Marine Bancorp., 418 U.S. at 622, 633 (“[T]he proscription expressed in § 7 against mergers ‘when a
“tendency” toward monopoly or [a] “reasonable likelihood” of a substantial lessening of competition in the relevant market is
shown’ applies alike to actual- and potential-competition cases.” (quoting Penn-Olin, 378 U.S. at 171)); see also Yamaha
Motor Co. v. FTC, 657 F.2d 971, 980-981 (8th Cir. 1981) (acquisition of potential entrant violated Section 7).

11

competitive significance, such as market share, its business strategy, the anticipated response of
competitors, or customer preferences or interest.
A merger of two potential entrants can also result in a substantial lessening of competition. The
merger need not involve a firm that has a commercialized product in the market or an existing presence
in the same geographic market. The Agencies analyze similarly mergers between two potential entrants
and those involving a current market participant and a potential entrant.
2.4.B. Perceived Potential Competition: Lessening of Current Competitive Pressure
A perceived potential entrant can stimulate competition among incumbents. That pressure can
prompt current market participants to make investments, expand output, raise wages, increase product
quality, lower product prices, or take other procompetitive actions. The acquisition of a firm that is
perceived by market participants as a potential entrant can substantially lessen competition by
eliminating or relieving competitive pressure.
To assess whether the acquisition of a perceived potential entrant may substantially lessen
competition, the Agencies consider whether a current market participant could reasonably consider one
of the merging companies to be a potential entrant and whether that potential entrant has a likely
influence on existing competition.26
Market Participant Could Reasonably Consider a Firm to Be a Potential Entrant. The starting
point for this analysis is evidence regarding the company’s capability of entering or applying
competitive pressure. Objective evidence is highly probative and includes evidence of feasible means of
entry or communications by the company indicating plans to expand or reallocate resources in a way
that could increase competition in the relevant market. Objective evidence can be sufficient to find that
the firm is a potential entrant; it need not be accompanied by any subjective evidence of current market
participants’ internal perceptions or direct evidence of strategic reactions to the potential entrant. If such
evidence is available, it can weigh in favor of finding that a current market participant could reasonably
consider the firm to be a potential entrant.
Likely Influence on Existing Rivals. Direct evidence that the firm’s presence or behavior has
affected or is affecting current market participants’ strategic decisions is not necessary but can establish
a showing of a likely influence. Even without such direct evidence, circumstantial evidence that the
firm’s presence or behavior had an effect on the competitive reactions of firms in the market may also
show likely influence. Objective evidence establishing that a current market participant could reasonably
consider one of the merging firms to be a potential entrant can also establish that the firm has a likely
influence on existing market participants. Subjective evidence indicating that current market
participants—including, for example, customers, suppliers, or distributors—internally perceive the
merging firm to be a potential entrant can also establish a likely influence.
2.4.C. Distinguishing Potential Entry from Entry as Rebuttal
When evaluating a potentially unlawful merger of current competitors, the Agencies will assess
whether entry by other firms would be timely, likely, and sufficient to replace the lost competition using
the standards discussed in Section 3.2. The existence of a perceived or actual potential entrant may not
meet that standard when considering a merger between firms that already participate in the relevant
market. The competitive impact of perceived and actual potential entrants is typically attenuated
26

See United States v. Falstaff Brewing Corp., 410 U.S. 526, 533-36 (1973); Marine Bancorp., 418 U.S. at 624-25.

12

compared to competition between two current market participants. However, because concentrated
markets often lack robust competition, the loss of even an attenuated source of competition such as a
potential entrant may substantially lessen competition in such markets. Moreover, because the Agencies
seek to prevent threats to competition in their incipiency, the likelihood of potential entry that could
establish that a merger’s effect “may be” to substantially lessen competition will generally not equal the
likelihood of entry that would rebut a demonstrated risk that competition may be substantially lessened.

2.5.

Guideline 5: Mergers Can Violate the Law When They Create a Firm
that May Limit Access to Products or Services That Its Rivals Use to
Compete.

The Agencies evaluate whether a merger may substantially lessen competition when the merged
firm can limit access to a product, service, or route to market 27 that its rivals may use to compete.
Mergers involving products or services rivals may use to compete can threaten competition in several
ways, for example: (A) the merged firm could limit rivals’ access to the products or services, thereby
weakening or excluding them, lessening competition; (B) the merged firm may gain or increase access
to rivals’ competitively sensitive information, thereby facilitating coordination or undermining their
incentives to compete; or (C) the threat of limited access can deter rivals and potential rivals from
investing.
These problems can arise from mergers involving access to any products, services, or routes to
market that rivals use to compete, and that are competitively significant to those rivals, whether or not
they involve a traditional vertical relationship such as a supplier and distributor relationship. Many types
of related products can implicate these concerns, including products rivals currently or may in the future
use as inputs, products that provide distribution services for rivals or otherwise influence customers’
purchase decisions, products that provide or increase the merged firm’s access to competitively sensitive
information about its rivals, or complements that increase the value of rivals’ products. Even if the
related product is not currently being used by rivals, it might be competitively significant because, for
example, its availability enables rivals to obtain better terms from other providers in negotiations. The
Agencies refer to any product, service, or route to market that rivals use to compete in that market as a
“related product.”
The Agencies analyze competitive effects in the relevant market in which the merged firm
competes with rivals that use the related product. The Agencies do not always define a market around
the related product, although they may do so (see Section 2.5.A.2).
2.5.A. The Risk that the Merged Firm May Limit Access
A merger involving products, services, or routes to market that rivals use to compete may
substantially lessen competition when the merged firm has both the ability and incentive to limit access
to the related product so as to weaken or exclude some of its rivals (the “dependent” rivals) in the
relevant market.
The merged firm could limit access to the related product in different ways. It could deny rivals
access altogether, deny access to some features, degrade its quality, worsen the terms on which rivals
27

A “route to market” refers to any way a firm accesses its trading partners, such as distribution channels, marketplaces, or
customers.

13

can access the related product, limit interoperability, degrade the quality of complements, provide less
reliable access, tie up or obstruct routes to market, or delay access to product features, improvements, or
information relevant to making efficient use of the product. All these ways of limiting access are
sometimes referred to as “foreclosure.” 28
Dependent rivals can be weakened if limiting their access to the related product would make it
harder or more costly for them to compete; for example, if it would lead them to charge higher prices or
offer worse terms in the relevant market, reduce the quality of their products so that they were less
attractive to trading partners, or interfere with distribution so that those products were less readily
available. Competition can also be weakened if the merger facilitates coordination among the merged
firm and its rivals, for example by giving the merged firm the ability to threaten to limit access to
uncooperative rivals.
Rivals or potential rivals may be excluded from the relevant market if limiting their access to the
related product could lead them to exit the market or could deter them from entering. For example,
potential rivals may not enter if the merged firm ties up or obstructs so many routes to market that the
remaining addressable market is too small. Exclusion can arise when a new entrant would need to invest
not only in entering the relevant market, but also in supplying its own substitute for the related product,
sometimes referred to as two-stage entry or multi-level entry.
Because the merged firm could use its ability to limit access to the related product in a range of
ways, the Agencies focus on the overall risk that the merged firm will do so, and do not necessarily
identify which precise actions the merged firm would take to lessen competition.
2.5.A.1.

Ability and Incentive to Foreclose Rivals

The Agencies assess the merged firm’s ability and incentive to substantially lessen competition
by limiting access to the related product for a group of dependent rivals in the relevant market by
examining four factors.
1. Availability of Substitutes. The Agencies assess the availability of substitutes for the related
product. The merged firm is more able to limit access when there are few alternative options to the
merged firm’s related product, if these alternatives are differentiated in quality, price, or other
characteristics, or if competition to supply them is limited.
2. Competitive Significance of the Related Product. The Agencies consider how important the
related product is for the dependent firms and the extent to which they would be weakened or excluded
from the relevant market if their access was limited.
3. Effect on Competition in the Relevant Market. The Agencies assess the importance of the
dependent firms for competition in the relevant market. Competition can be particularly affected when
the dependent firms would be excluded from the market altogether.
4. Competition Between the Merged Firm and the Dependent Firms. The merged firm’s
incentive to limit the dependent firms’ access depends on how strongly it competes with them. If the
dependent firms are close competitors, the merged firm may benefit from higher sales or prices in the
relevant market when it limits their access. The Agencies may also assess the potential for the merged
28

See Illumina, Inc. v. FTC, No. 23-60167, slip op. at 17 (5th Cir. Dec. 15, 2023) (“[T]here are myriad ways in which [the
merged firm] could engage in foreclosing behavior . . . such as by making late deliveries or subtly reducing the level of
support services.”).

14

firm to benefit from facilitating coordination by threatening to limit dependent rivals’ access to the
related product. These benefits can make it profitable to limit access to the related product and thereby
substantially lessen competition, even though it would not have been profitable for the firm that
controlled the related product prior to the merger.
The Agencies assess the extent of competition with rivals and the risk of coordination using
analogous methods to the ones described in Guidelines 2 and 3, and Section 4.2.
*

*

*

In addition to the evidentiary, analytical, and economic tools in Section 4, the following
additional considerations and evidence may be important to this assessment:
Barriers to Entry and Exclusion of Rivals. The merged firm may benefit more from limiting
access to dependent rivals or potential rivals when doing so excludes them from the market, for example
by creating a need for the firm to enter at multiple levels and to do so with sufficient scale and scope
(multi-level entry).
Prior Transactions or Prior Actions. If firms used prior acquisitions or engaged in prior actions
to limit rivals’ access to the related product, or other products its rivals use to compete, that suggests that
the merged firm has the ability and incentive to do so. However, lack of past action does not necessarily
indicate a lack of incentive in the present transaction because the merger can increase the incentive to
foreclose.
Internal Documents. Information from business planning and merger analysis documents
prepared by the merging firms might identify instances where the firms believe they have the ability and
incentive to limit rivals’ access. Such documents, where available, are highly probative. The lack of
such documents, however, is less informative.
Market Structure. Evidence of market structure can be informative about the availability of
substitutes for the related product and the competition in the market for the related product or the
relevant market. (See Section 2.5.A.2)
2.5.A.2.

Analysis of Industry Factors and Market Structure

The Agencies also sometimes determine, based on an analysis of factors related to market
structure, that a merger may substantially lessen competition by allowing the merged firm to limit access
to a related product.29 The Agencies’ assessment can include evidence about the structure, history, and
probable future of the market.
Structure of the Related Market. In some cases, the market structure of the related product
market can give an indication of the merged firm’s ability to limit access to the related product. In these
cases, the Agencies define a market (termed the “related market”) around the related product (see
Section 4.3). The Agencies then define the “foreclosure share” as the share of the related market to
which the merged firm could limit access. If the share or other evidence show that the merged firm is
29

See Brown Shoe, 370 U.S. at 328-34; Illumina, slip op. at 20-22 (“There is no precise formula when it comes to applying
these factors. Indeed, the Supreme Court has found a vertical merger unlawful by examining only three of the Brown Shoe
factors.” (cleaned up)); Fruehauf Corp. v. FTC, 603 F.2d 345, 353 (2d Cir. 1979); U.S. Steel Corp. v. FTC, 426 F.2d 592, 599
(6th Cir. 1970).

15

approaching or has monopoly power over the related product, and the related product is competitively
significant, those factors alone are a sufficient basis to demonstrate that the dependent firms do not have
adequate substitutes and the merged firm has the ability to weaken or exclude them by limiting their
access to the related product. (See Considerations 1 and 2 in Section 2.5.A.1). 30
Structure of the Relevant Market. Limiting rivals’ access to the related product will generally
have a greater effect on competition in the relevant market if the merged firm and the dependent rivals
face less competition from other firms. In addition, the merged firm has a greater incentive to limit
access to the dependent firms when it competes more closely with them. Market share and concentration
measures for the merged firm, the dependent rivals, and the other firms, can sometimes provide evidence
about both issues.
Nature and Purpose of the Merger. When the nature and purpose of the merger is to foreclose
rivals, including by raising their costs, that suggests the merged firm is likely to foreclose rivals.
Trend Toward Vertical Integration. The Agencies will generally consider evidence about the
degree of integration between firms in the relevant and related markets, as well as whether there is a
trend toward further vertical integration and how that trend or the factors driving it may affect
competition. A trend toward vertical integration may be shown through, for example: a pattern of
vertical integration following mergers by one or both of the merging companies; or evidence that a
merger was motivated by a desire to avoid having its access limited due to similar transactions among
other companies that occurred or may occur in the future.
*

*

*

If the parties offer rebuttal evidence, the Agencies will assess it under the approach laid out in
Section 3.31 When assessing rebuttal evidence focused on the reduced profits of the merged firm from
limiting access from rivals, the Agencies examine whether the reduction in profits would prevent the full
range of reasonably probable strategies to limit access. When evaluating whether this rebuttal evidence
is sufficient to conclude that no substantial lessening of competition is threatened by the merger, the
Agencies will give little weight to claims that are not supported by an objective analysis, including, for
example, speculative claims about reputational harms. Moreover, the Agencies are unlikely to credit
claims or commitments to protect or otherwise avoid weakening the merged firm’s rivals that do not
align with the firm’s incentives. The Agencies’ assessment will be consistent with the principle that
firms act to maximize their overall profits and valuation rather than the profits of any particular business
30

See Brown Shoe, 370 U.S. at 328 (“If the share of the market foreclosed is so large that it approaches monopoly
proportions, the Clayton Act will, of course, have been violated . . . .”). The Agencies will generally infer, in the absence of
countervailing evidence, that the merging firm has or is approaching monopoly power in the related product if it has a share
greater than 50% of the related product market. A merger involving a related product with share of less than 50% may still
substantially lessen competition, particularly when that related product is important to its trading partners.
31
A common rebuttal argument is that the merger would lead to vertical integration of complementary products and as a
result, “eliminate double marginalization,” since in specific circumstances such a merger can confer on the merged firm an
incentive to decrease prices to purchasers. The Agencies examine whether elimination of double marginalization satisfies the
approach to evaluating procompetitive efficiencies in Section 3.3, including examining: (a) whether the merged firm will be
more vertically integrated as a result of the merger, for example because it increases the extent to which it uses internal
production of an input when producing output for the relevant market; (b) whether contracts short of a merger have
eliminated or could eliminate double marginalization such that it would not be merger-specific, and (c) whether the merged
firm has the incentive to reduce price in the relevant market given that such a reduction would reduce sales by the merged
firm’s rivals in the relevant market, which would in turn lead to reduced revenue and margin on sales of the related product to
the dependent rivals.

16

unit. A merger may substantially lessen competition or tend to create a monopoly regardless of the
claimed intent of the merging companies or their executives. (See Section 4.1)
If the merged firm has the ability and incentive to limit access to the related product and lessen
competition in the relevant market, there are many ways it could act on those incentives. The merging
parties may put forward evidence that there are no reasonably probable ways in which they could
profitably limit access to the related product and thereby make it harder for rivals to compete, or that the
merged firm will be more competitive because of the merger.
2.5.B. Mergers Involving Visibility into Rivals’ Competitively Sensitive Information
If rivals would continue to access or purchase a related product controlled by the merged firm
post-merger, the merger can substantially lessen competition if the merged firm would gain or increase
visibility into rivals’ competitively sensitive information. This situation could arise in many settings,
including, for example, if the merged firm learns about rivals’ sales volumes or projections from
supplying an input or a complementary product; if it learns about promotion plans and anticipated
product improvements or innovations from its role as a distributor; or if it learns about entry plans from
discussions with potential rivals about compatibility or interoperability with a complementary product it
controls. A merger that gives the merged firm increased visibility into competitively sensitive
information could undermine rivals’ ability or incentive to compete aggressively or could facilitate
coordination.
Undermining Competition. The merged firm might use visibility into a rival’s competitively
sensitive information to undermine competition from the rival. For example, the merged firm’s ability to
preempt, appropriate, or otherwise undermine the rival’s procompetitive actions can discourage the rival
from fully pursuing competitive opportunities. Relatedly, rivals might refrain from doing business with
the merged firm rather than risk that the merged firm would use their competitively sensitive business
information to undercut them. Those rivals might become less-effective competitors if they must rely on
less-preferred trading partners or accept less favorable trading terms because their outside options have
worsened or are more limited.
Facilitating Coordination. A merger that provides access to rivals’ competitively sensitive
information might facilitate coordinated interaction among firms in the relevant market by allowing the
merged firm to observe its rivals’ competitive strategies faster and more confidently. (See Guideline 3.)
2.5.C. Mergers that Threaten to Limit Rivals’ Access and Thereby Create Barriers to
Entry and Competition
When a merger gives a firm the ability and incentive to limit rivals’ access, or where it gives the
merged firm increased visibility into its rivals’ competitively sensitive information, the merger may
create entry barriers as described above. In addition, the merged firm’s rivals might change their
behavior because of the risk that the merged firm could limit their access. That is, the risk that the
merger will give a firm the ability and incentive to limit rivals’ access or will give the merged firm
increased visibility into sensitive information can dissuade rivals from entering the market or expanding
their operations.
Rivals or potential rivals that face the threat of foreclosure, or the risk of sharing sensitive
information with rivals, may reduce investment or adjust their business strategies in ways that lessen
competition. Firms may be reluctant to invest in a market if their success is dependent on continued
supply from a rival, particularly because the merged firm may become more likely to foreclose its
17

competitor as that competitor becomes more successful. Firms may use expensive strategies to try to
reduce their dependence on the merged firm, weakening the competitiveness of their products and
services. Even if the merged firm does not deliberately seek to weaken rivals, rivals or potential rivals
may fear that their access will be limited if the merged firm decides to use its own products exclusively.
These effects may occur irrespective of the merged firm’s incentive to limit access and are greater as the
merged firm gains greater control over more important inputs that those rivals use to compete.

2.6.

Guideline 6: Mergers Can Violate the Law When They Entrench or
Extend a Dominant Position.

The Agencies consider whether a merger may entrench or extend an already dominant position.
The effect of such mergers “may be substantially to lessen competition” or “may be . . . to tend to create
a monopoly” in violation of Section 7 of the Clayton Act. Indeed, the Supreme Court has explained that
a merger involving an “already dominant[] firm may substantially reduce the competitive structure of
the industry by raising entry barriers.”32 The Agencies also evaluate whether the merger may extend that
dominant position into new markets. 33 Mergers that entrench or extend a dominant position can also
violate Section 2 of the Sherman Act. 34 At the same time, the Agencies distinguish anticompetitive
entrenchment from growth or development as a consequence of increased competitive capabilities or
incentives.35 The Agencies therefore seek to prevent those mergers that would entrench or extend a
dominant position through exclusionary conduct, weakening competitive constraints, or otherwise
harming the competitive process.
To undertake this analysis, the Agencies first assess whether one of the merging firms has a
dominant position based on direct evidence or market shares showing durable market power. For
example, the persistence of market power can indicate that entry barriers exist, that further entrenchment
may tend to create a monopoly, and that there would be substantial benefits from the emergence of new
competitive constraints or disruptions. The Agencies consider mergers involving dominant firms in the
context of evidence about the sources of that dominance, focusing on the extent to which the merger
relates to, reinforces, or supplements these sources.
Creating or preserving dominance and the profits it brings can be an important motivation for a
firm to undertake an acquisition as well as a driver of the merged firm’s behavior after the acquisition.
In particular, a firm may be willing to undertake costly short-term strategies in order to increase the
chance that it can enjoy the longer-term benefits of dominance. A merger that creates or preserves
dominance may also reduce the merged firm’s longer-term incentives to improve its products and
services.
A merger can result in durable market power and long-term harm to competition even when it
initially provides short-term benefits to some market participants. Thus, the Agencies will consider not
just the impact of the merger holding fixed factors like product quality and the behavior of other
industry participants, but they may also consider the (often longer term) impact of the merger on market
32

FTC v. Procter & Gamble Co., 386 U.S. 568, 577-578 (1967); see, e.g., Fruehauf, 603 F.2d at 353 (the “entrenchment of a
large supplier or purchaser” can be an “essential” showing of a Section 7 violation).
33
Ford, 405 U.S. at 571 (condemning acquisition by dominant firm to obtain a foothold in another market when coupled with
incentive to create and maintain barriers to entry into that market).
34
See, e.g., United States v. Grinnell Corp., 384 U.S. 563 (1966) (acquisitions are among the types of conduct that may
violate the Sherman Act).
35
See, e.g., id. at 570-71.

18

power and industry dynamics. Important dynamic competitive effects can arise through the entry,
investment, innovation, and terms offered by the merged firm and other industry participants, even when
the Agencies cannot predict specific reactions and responses with precision. If the ultimate result of the
merger is to protect or preserve dominance by limiting opportunities for rivals, reducing competitive
constraints, or preventing competitive disruption, then the Agencies will approach the merger with a
heightened degree of scrutiny. The degree of scrutiny and concern will increase in proportion to the
strength and durability of the dominant firm’s market power.
2.6.A. Entrenching a Dominant Position
Raising Barriers to Entry or Competition. A merger may create or enhance barriers to entry or
expansion by rivals that limit the capabilities or competitive incentives of other firms. Barriers to entry
can entrench a dominant position even if the nature of future entry is uncertain, if the identities of future
entrants are unknown, or if there is more than one mechanism through which the merged firm might
create entry barriers. Some examples of ways in which a merger may raise barriers to entry or
competition include:


Increasing Switching Costs. The costs associated with changing suppliers (often referred to
as switching costs) can be an important barrier to competition. A merger may increase
switching costs if it makes it more difficult for customers to switch away from the dominant
firm’s product or service, or when it gives the dominant firm control of something customers
use to switch providers or of something that lowers the overall cost to customers of switching
providers. For example, if a dominant firm merges with a complementary product that
interoperates with the dominant firm’s competitors, it could reduce interoperability, harming
competition for customers who value the complement.



Interfering With the Use of Competitive Alternatives. A dominant position may be threatened
by a service that customers use to work with multiple providers of similar or overlapping
bundles of products and services. If a dominant firm acquires a service that supports the use
of multiple providers, it could degrade its utility or availability or could modify the service to
steer customers to its own products, entrenching its dominant position. For example, a closed
messaging communication service might acquire a product that allowed users to send and
receive messages over several competing services through a single user interface, which
facilitates competition. The Agencies would examine whether the acquisition would entrench
the messaging service’s market power by leading the merged firm to degrade the product or
otherwise reduce its effectiveness as a cross-service tool, thus reducing competition.



Depriving Rivals of Scale Economies or Network Effects. Scale economies and network
effects can serve as a barrier to entry and competition. Depriving rivals of access to scale
economies and network effects can therefore entrench a dominant position. If a merger
enables a dominant firm to reduce would-be rivals’ access to additional scale or customers by
acquiring a product that affects access such as a customer acquisition channel, the merged
firm can limit the ability of rivals to improve their own products and compete more
effectively.36 Limiting access by rivals to customers in the short run can lead to long run
entrenchment of a dominant position and tend to create monopoly power.

36

The Agencies’ focus here is on the artificial acquisition of network participants that occurs directly as a result of the
merger, as opposed to future network growth that may occur through competition on the merits.

19

For example, if two firms operate in a market in which network effects are significant but in
which rivals voluntarily interconnect, their merger can create an entity with a large enough
user base that it may have the incentive to end voluntary interconnection. Such a strategy can
lessen competition and harm trading partners by creating or entrenching dominance in this
market. This can be the case even if the merging firms did not appear to have a dominant
position prior to the merger because their interoperability practices strengthened rivals.
Eliminating a Nascent Competitive Threat. A merger may involve a dominant firm acquiring a
nascent competitive threat—namely, a firm that could grow into a significant rival, facilitate other
rivals’ growth, or otherwise lead to a reduction in its power.37 In some cases, the nascent threat may be a
firm that provides a product or service similar to the acquiring firm that does not substantially constrain
the acquiring firm at the time of the merger but has the potential to grow into a more significant rival in
the future. In other cases, factors such as network effects, scale economies, or switching costs may make
it extremely difficult for a new entrant to offer all of the product features or services at comparable
quality and terms that an incumbent offers. The most likely successful threats in these situations can be
firms that initially avoid directly entering the dominant firm’s market, instead specializing in (a) serving
a narrow customer segment, (b) offering services that only partially overlap with those of the incumbent,
or (c) serving an overlapping customer segment with distinct products or services.
Firms with niche or only partially overlapping products or customers can grow into longer-term
threats to a dominant firm. Once established in its niche, a nascent threat may be able to add features or
serve additional customer segments, growing into greater overlap of customer segments or features over
time, thereby intensifying competition with the dominant firm. A nascent threat may also facilitate
customers aggregating additional products and services from multiple providers that serve as a partial
alternative to the incumbent’s offering. Thus, the success and independence of the nascent threat may
both provide for a direct threat of competition by the niche or nascent firm and may facilitate
competition or encourage entry by other, potentially complementary providers that may provide a partial
competitive constraint. In this way, the nascent threat supports what may be referred to as “ecosystem”
competition. In this context, ecosystem competition refers to a situation where an incumbent firm that
offers a wide array of products and services may be partially constrained by other combinations of
products and services from one or more providers, even if the business model of those competing
services is different.
Nascent threats may be particularly likely to emerge during technological transitions.
Technological transitions can render existing entry barriers less relevant, temporarily making
incumbents susceptible to competitive threats. For example, technological transitions can create
temporary opportunities for entrants to differentiate or expand their offerings based on their alignment
with new technologies, enabling them to capture network effects that otherwise insulate incumbents
from competition. A merger in this context may lessen competition by preventing or delaying any such
beneficial shift or by shaping it so that the incumbent retains its dominant position. For example, a
dominant firm might seek to acquire firms to help it reinforce or recreate entry barriers so that its
dominance endures past the technological transition. Or it might seek to acquire nascent threats that
might otherwise gain sufficient customers to overcome entry barriers. In evaluating the potential for
entrenching dominance, the Agencies take particular care to preserve opportunities for more competitive
markets to emerge during such technological shifts.

37

The Agencies assess acquisitions of nascent competitive threats by non-dominant firms under the other Guidelines.

20

Separate from and in addition to its Section 7 analysis, the Agencies will consider whether the
merger violates Section 2 of the Sherman Act. For example, under Section 2 of the Sherman Act, a firm
that may challenge a monopolist may be characterized as a “nascent threat” even if the impending threat
is uncertain and may take several years to materialize.38 The Agencies assess whether the merger is
reasonably capable of contributing significantly to the preservation of monopoly power in violation of
Section 2, which turns on whether the acquired firm is a nascent competitive threat. 39
2.6.B. Extending a Dominant Position into Another Market
The Agencies also examine the risk that a merger could enable the merged firm to extend a
dominant position from one market into a related market, thereby substantially lessening competition or
tending to create a monopoly in the related market. For example, the merger might lead the merged firm
to leverage its position by tying, bundling, conditioning, or otherwise linking sales of two products. A
merger may also raise barriers to entry or competition in the related market, or eliminate a nascent
competitive threat, as described above. For example, prior to a merger, a related market may be
characterized by scale economies but still experience moderate levels of competition. If the merged firm
takes actions to induce customers of the dominant firm’s product to also buy the related product from
the merged firm, the merged firm may be able to gain dominance in the related market, which may be
supported by increased barriers to entry or competition that result from the merger.
These concerns can arise notwithstanding that the acquiring firm already enjoys the benefits
associated with its dominant position. The prospect of market power in the related market may strongly
affect the merged firm’s incentives in a way that does not align with the interests of its trading partners,
both in terms of strategies that create dominance for the related product and in the form of reduced
incentives to invest in its products or provide attractive terms for them after dominance is attained. In
some cases, the merger may also further entrench the firm’s original dominant position, for example if
future competition requires the provision of both products.
*

*

*

If the merger raises concerns that its effect may be to entrench or extend a dominant position,
then any claim that the merger also provides competitive benefits will be evaluated under the rebuttal
framework in Section 3. For example, the framework of Section 3 would be used to evaluate claims that
a merger would generate cost savings or quality improvements that would be passed through to make
their products more competitive or would otherwise create incentives for the merged firm to offer better
terms. The Agencies’ analysis will consider the fact that the incentives to pass through benefits to
customers or offer attractive terms are affected by competition and the extent to which entry barriers
insulate the merged firm from effective competition. It will also consider whether any claimed benefits
are specific to the merger, or whether they could be instead achieved through contracting or other
means.

38

United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001) (en banc) (per curiam).
See id. at 79 (“[I]t would be inimical to the purpose of the Sherman Act to allow monopolists free reign to squash nascent,
albeit unproven, competitors at will. . . .”).
39

21

2.7.

Guideline 7: When an Industry Undergoes a Trend Toward
Consolidation, the Agencies Consider Whether It Increases the Risk a
Merger May Substantially Lessen Competition or Tend to Create a
Monopoly.

The recent history and likely trajectory of an industry can be an important consideration when
assessing whether a merger presents a threat to competition. The Supreme Court has explained that “a
trend toward concentration in an industry, whatever its causes, is a highly relevant factor in deciding
how substantial the anticompetitive effect of a merger may be.” 40 It has also underscored that “Congress
intended Section 7 to arrest anticompetitive tendencies in their incipiency. 41 The Agencies therefore
examine whether a trend toward consolidation in an industry would heighten the competition concerns
identified in Guidelines 1-6.
The Agencies therefore closely examine industry consolidation trends in applying the
frameworks above. For example:
Trend Toward Concentration. If an industry has gone from having many competitors to
becoming concentrated, it may suggest greater risk of harm, for example, because new entry may be less
likely to replace or offset the lessening of competition the merger may cause. Among other implications,
in the context of a trend toward concentration, the Agencies identify a stronger presumption of harm
from undue concentration (see Guideline 1), and a greater risk of substantially lessening competition
when a merger eliminates competition between the merging parties (see Guideline 2) or increases the
risk of coordination (see Guideline 3).
Trend Toward Vertical Integration. The Agencies will generally consider evidence about the
degree of integration between firms in the relevant and related markets and whether there is a trend
toward further vertical integration. If a merger occurs amidst or furthers a trend toward vertical
integration, the Agencies consider the implications for the competitive dynamics of the industry moving
forward. For example, a trend toward vertical integration could magnify the concerns discussed in
Guideline 5 by making entry at a single level more difficult and thereby preventing the emergence of
new competitive threats over time.
Arms Race for Bargaining Leverage. The Agencies sometimes encounter mergers through
which the merging parties would, by consolidating, gain bargaining leverage over other firms that they
transact with. This can encourage those other firms to consolidate to obtain countervailing leverage,
encouraging a cascade of further consolidation. This can ultimately lead to an industry where a few
powerful firms have leverage against one another and market power over would-be entrants or over
trading partners in various parts of the value chain. For example, distributors might merge to gain
leverage against suppliers, who then merge to gain leverage against distributors, spurring a wave of
mergers that lessen competition by increasing the market power of both. This can exacerbate the
problems discussed in Guidelines 1-6, including by increasing barriers to single-level entry, encouraging
coordination, and discouraging disruptive innovation.

40
41

United States v. Pabst Brewing, 384 U.S. 546, 552-53 (1966).
Phila. Nat’l Bank, 374 U.S. at 362 (quoting Brown Shoe, 370 U.S. at 317).

22

Multiple Mergers. The Agencies sometimes see multiple mergers at once or in succession by
different players in the same industry. In such cases, the Agencies may examine multiple deals in light
of the combined trend toward concentration.

2.8.

Guideline 8: When a Merger is Part of a Series of Multiple Acquisitions,
the Agencies May Examine the Whole Series.

A firm that engages in an anticompetitive pattern or strategy of multiple acquisitions in the same
or related business lines may violate Section 7.42 In these situations, the Agencies may evaluate the
series of acquisitions as part of an industry trend (see Guideline 7) or evaluate the overall pattern or
strategy of serial acquisitions by the acquiring firm collectively under Guidelines 1-6.
In expanding antitrust law beyond the Sherman Act through passage of the Clayton Act,
Congress intended “to permit intervention in a cumulative process when the effect of an acquisition may
be a significant reduction in the vigor of competition, even though this effect may not be so far-reaching
as to amount to a combination in restraint of trade, create a monopoly, or constitute an attempt to
monopolize.”43 As the Supreme Court has recognized, a cumulative series of mergers can “convert an
industry from one of intense competition among many enterprises to one in which three or four large
[companies] produce the entire supply.” 44 Accordingly, the Agencies will consider individual
acquisitions in light of the cumulative effect of related patterns or business strategies.
The Agencies may examine a pattern or strategy of growth through acquisition by examining
both the firm’s history and current or future strategic incentives. Historical evidence focuses on the
strategic approach taken by the firm to acquisitions (consummated or not), both in the markets at issue
and in other markets, to reveal any overall strategic approach to serial acquisitions. Evidence of the
firm’s current incentives includes documents and testimony reflecting its plans and strategic incentives
both for the individual acquisition and for its position in the industry more broadly. Where one or both
of the merging parties has engaged in a pattern or strategy of pursuing consolidation through acquisition,
the Agencies will examine the impact of the cumulative strategy under any of the other Guidelines to
determine if that strategy may substantially lessen competition or tend to create a monopoly.

2.9.

Guideline 9: When a Merger Involves a Multi-Sided Platform, the
Agencies Examine Competition Between Platforms, on a Platform, or to
Displace a Platform.

Platforms provide different products or services to two or more different groups or “sides” who
may benefit from each other’s participation. Mergers involving platforms can threaten competition, even
when a platform merges with a firm that is neither a direct competitor nor in a traditional vertical
relationship with the platform. When evaluating a merger involving a platform, the Agencies apply
Guidelines 1-6 while accounting for market realities associated with platform competition. Specifically,

42

Such strategies may also violate Section 2 of the Sherman Act and Section 5 of the FTC Act. Fed. Trade Comm’n, Policy
Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act, at
12-14 & nn.73 & 82 (Nov. 10, 2022) (noting that “a series of . . . acquisitions . . . that tend to bring about the harms that the
antitrust laws were designed to prevent” has been subject to liability under Section 5).
43
H.R. Rep. No. 81-1191, at 8 (1949).
44
See Brown Shoe, 370 U.S. at 334 (citing S. Rep. No. 81-1775, at 5 (1950); H.R. Rep. No. 81-1191, at 8 (1949)).

23

the Agencies consider competition between platforms, competition on a platform, and competition to
displace the platform.
Multi-sided platforms generally have several attributes in common, though they can also vary in
important ways. Some of these attributes include:


Platforms have multiple sides. On each side of a platform, platform participants provide or
use distinct products and services. 45 Participants can provide or use different types of
products or services on each side.



A platform operator provides the core services that enable the platform to connect participant
groups across multiple sides. The platform operator controls other participants’ access to the
platform and can influence how interactions among platform participants play out.



Each side of a platform includes platform participants. Their participation might be as simple
as using the platform to find other participants, or as involved as building platform services
that enable other participants to connect in new ways and allow new participants to join the
platform.



Network effects occur when platform participants contribute to the value of the platform for
other participants and the operator. The value for groups of participants on one side may
depend on the number of participants either on the same side (direct network effects) or on
the other side(s) (indirect network effects). 46 Network effects can create a tendency toward
concentration in platform industries. Indirect network effects can be asymmetric and
heterogeneous; for example, one side of the market or segment of participants may place
relatively greater value on the other side(s).



A conflict of interest can arise when a platform operator is also a platform participant. The
Agencies refer to a “conflict of interest” as the divergence that can arise between the
operator’s incentives to operate the platform as a forum for competition and its incentive to
operate as a competitor on the platform itself. As discussed below, a conflict of interest
sometimes exacerbates competitive concerns from mergers.

Consistent with the Clayton Act’s protection of competition “in any line of commerce,” the
Agencies will seek to prohibit a merger that harms competition within a relevant market for any product
or service offered on a platform to any group of participants—i.e., around one side of the platform (see
Section 4.3).47

45

For example, on 1990s operating-system platforms for personal computer (PC) software, software developers were on one
side, PC manufacturers on another, and software purchasers on another.
46
For example, 1990s PC manufacturers, software developers, and consumers all contributed to the value of the operating
system platform for one another.
47
In the limited scenario of a “special type of two-sided platform known as a ‘transaction’ platform,” under Section 1 of the
Sherman Act, a relevant market encompassing both sides of a two-sided platform may be warranted. Ohio v. American
Express Co., 138 S. Ct. 2274, 2280 (2018). This approach to Section 1 of the Sherman Act is limited to platforms with the
“key feature . . . that they cannot make a sale to one side of the platform without simultaneously making a sale to the other.”
Id. Because “they cannot sell transaction services to [either user group] individually . . . transaction platforms are better
understood as supplying only one product—transactions.” Id. at 2286. This characteristic is not present for many types of
two-sided or multi-sided platforms; in addition, many platforms offer simultaneous transactions as well as other products and
services, and further they may bundle these products with access to transact on the platform or offer quantity discounts.

24

The Agencies protect competition between platforms by preventing the acquisition or exclusion
of other platform operators that may substantially lessen competition or tend to create a monopoly. This
scenario can arise from various types of mergers:
A. Mergers involving two platform operators eliminate the competition between them. In a
market with a platform, entry or growth by smaller competing platforms can be particularly
challenging because of network effects. A common strategy for smaller platforms is to
specialize, providing distinctive features. Thus, dominant platforms can lessen competition
and entrench their position by systematically acquiring firms competing with one or more
sides of a multi-sided platform while they are in their infancy. The Agencies seek to stop
these trends in their incipiency.
B. A platform operator may acquire a platform participant, which can entrench the operator’s
position by depriving rivals of participants and, in turn, depriving them of network effects.
For example, acquiring a major seller on a platform may make it harder for rival platforms to
recruit buyers. The long-run benefits to a platform operator of denying network effects to
rival platforms create a powerful incentive to withhold or degrade those rivals’ access to
platform participants that the operator acquires. The more powerful the platform operator, the
greater the threat to competition presented by mergers that may weaken rival operators or
increase barriers to entry and expansion.
C. Acquisitions of firms that provide services that facilitate participation on multiple platforms
can deprive rivals of platform participants. Many services can facilitate such participation,
such as tools that help shoppers compare prices across platforms, applications that help
sellers manage listings on multiple platforms, or software that helps users switch among
platforms.
D. Mergers that involve firms that provide other important inputs to platform services can
enable the platform operator to deny rivals the benefits of those inputs. For example,
acquiring data that helps facilitate matching, sorting, or prediction services may enable the
platform to weaken rival platforms by denying them that data.
The Agencies protect competition on a platform in any markets that interact with the platform.
When a merger involves a platform operator and platform participants, the Agencies carefully examine
whether the merger would create conflicts of interest that would harm competition. A platform operator
that is also a platform participant may have a conflict of interest whereby it has an incentive to give its
own products and services an advantage over other participants competing on the platform. Platform
operators must often choose between making it easy for users to access their preferred products and
directing those users to products that instead provide greater benefit to the platform operator . Merging
with a firm that makes a product offered on the platform may change how the platform operator
balances these competing interests. For example, the platform operator may find it is more profitable to
give its own product greater prominence even if that product is inferior or is offered on worse terms after
the merger—and even if some participants leave the platform as a result. 48 This can harm competition in
48

However, few participants will leave if, for example, the switching costs are relatively high or if the advantaged product is
a small component of the overall set of services those participants access on the platform. Moreover, in the long run few
participants will leave if scale economies, network effects, or entry barriers enable the advantaged product to eventually gain
market power of its own, with rivals of the advantaged product exiting or becoming less attractive. After these dynamics play

25

the product market for the advantaged product, where the harm to competition may be experienced both
on the platform and in other channels.
The Agencies protect competition to displace the platform or any of its services. For example,
new technologies or services may create an important opportunity for firms to replace one or more
services the incumbent platform operator provides, shifting some participants to partially or fully meet
their needs in different ways or through different channels. Similarly, a non-platform service can lessen
dependence on the platform by providing an alternative to one or more functions provided by the
platform operators. When platform owners are dominant, the Agencies seek to prevent even relatively
small accretions of power from inhibiting the prospects for displacing the platform or for decreasing
dependency on the platform.
In addition, a platform operator that advantages its own products that compete on the platform
can lessen competition between platforms and to displace the platform, as the operator may both
advantage its own product or service, and also deprive rival platforms of access to it, limiting those
rivals’ network effects.

2.10. Guideline 10: When a Merger Involves Competing Buyers, the Agencies
Examine Whether It May Substantially Lessen Competition for
Workers, Creators, Suppliers, or Other Providers.
A merger between competing buyers may harm sellers just as a merger between competing
sellers may harm buyers.49 The same—or analogous—tools used to assess the effects of a merger of
sellers can be used to analyze the effects of a merger of buyers, including employers as buyers of labor.
Firms can compete to attract contributions from a wide variety of workers, creators, suppliers, and
service providers. The Agencies protect this competition in all its forms.
A merger of competing buyers can substantially lessen competition by eliminating the
competition between the merging buyers or by increasing coordination among the remaining buyers. It
can likewise lead to undue concentration among buyers or entrench or extend the position of a dominant
buyer. Competition among buyers can have a variety of beneficial effects analogous to competition
among sellers. For example, buyers may compete by raising the payments offered to suppliers, by
expanding supply networks, through transparent and predictable contracting, procurement, and payment
practices, or by investing in technology that reduces frictions for suppliers. In contrast, a reduction in
competition among buyers can lead to artificially suppressed input prices or purchase volume, which in
turn reduces incentives for suppliers to invest in capacity or innovation. Labor markets are important
buyer markets. The same general concerns as in other markets apply to labor markets where employers
are the buyers of labor and workers are the sellers. The Agencies will consider whether workers face a
risk that the merger may substantially lessen competition for their labor. 50 Where a merger between
out, the platform operator could advantage its own products without losing as many participants, as there would be fewer
alternative products available through other channels.
49

See, e.g., Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 219, 235-36 (1948) (“The [Sherman Act] does
not confine its protection to consumers, or to purchasers, or to competitors, or to sellers. . . . The Act is comprehensive in its
terms and coverage, protecting all who are made victims of the forbidden practices by whomever they may be perpetrated.”).
50
See, e.g., Alston, 141 S. Ct. 2141 (applying the Sherman Act to protect workers from an employer-side agreement to limit
compensation).

26

employers may substantially lessen competition for workers, that reduction in labor market competition
may lower wages or slow wage growth, worsen benefits or working conditions, or result in other
degradations of workplace quality.51 When assessing the degree to which the merging firms compete for
labor, evidence that a merger may have any one or more of these effects can demonstrate that substantial
competition exists between the merging firms.
Labor markets frequently have characteristics that can exacerbate the competitive effects of a
merger between competing employers. For example, labor markets often exhibit high switching costs
and search frictions due to the process of finding, applying, interviewing for, and acclimating to a new
job. Switching costs can also arise from investments specific to a type of job or a particular geographic
location. Moreover, the individual needs of workers may limit the geographical and work scope of the
jobs that are competitive substitutes.
In addition, finding a job requires the worker and the employer to agree to the match. Even
within a given salary and skill range, employers often have specific demands for the experience, skills,
availability, and other attributes they desire in their employees. At the same time, workers may seek not
only a paycheck but also work that they value in a workplace that matches their own preferences, as
different workers may value the same aspects of a job differently. This matching process often narrows
the range of rivals competing for any given employee. The level of concentration at which competition
concerns arise may be lower in labor markets than in product markets, given the unique features of
certain labor markets. In light of their characteristics, labor markets can be relatively narrow.
The features of labor markets may in some cases put firms in dominant positions. To assess this
dominance in labor markets (see Guideline 6), the Agencies often examine the merging firms’ power to
cut or freeze wages, slow wage growth, exercise increased leverage in negotiations with workers, or
generally degrade benefits and working conditions without prompting workers to quit.
If the merger may substantially lessen competition or tend to create a monopoly in upstream
markets, that loss of competition is not offset by purported benefits in a separate downstream product
market. Because the Clayton Act prohibits mergers that may substantially lessen competition or tend to
create a monopoly in any line of commerce and in any section of the country, a merger’s harm to
competition among buyers is not saved by benefits to competition among sellers. That is, a merger can
substantially lessen competition in one or more buyer markets, seller markets, or both, and the Clayton
Act protects competition in any one of them. 52 If the parties claim any benefits to competition in a
relevant buyer market, the Agencies will assess those claims using the frameworks in Section 3.
Just as they do when analyzing competition in the markets for products and services, the
Agencies will analyze labor market competition on a case-by-case basis.

51

A decrease in wages is understood as relative to what would have occurred in the absence of the transaction; in many cases,
a transaction will not reduce wage levels, but rather slow wage growth. Wages encompass all aspects of pecuniary
compensation, including benefits. Job quality encompasses non-pecuniary aspects that workers value, such as working
conditions and terms of employment.
52
Often, mergers that harm competition among buyers also harm competition among sellers as a result. For example, when a
monopsonist lowers purchase prices by decreasing input purchases, they will generally decrease sales in downstream markets
as well. (See Section 4.2.D)

27

2.11. Guideline 11: When an Acquisition Involves Partial Ownership or
Minority Interests, the Agencies Examine Its Impact on Competition.
In many acquisitions, two companies come under common control. In some situations, however,
the acquisition of less-than-full control may still influence decision-making at the target firm or another
firm in ways that may substantially lessen competition. Acquisitions of partial ownership or other
minority interests may give the investor rights in the target firm, such as rights to appoint board
members, observe board meetings, influence the firm’s ability to raise capital, impact operational
decisions, or access competitively sensitive information. The Agencies have concerns with both crossownership, which refers to holding a non-controlling interest in a competitor, as well as common
ownership, which occurs when individual investors hold non-controlling interests in firms that have a
competitive relationship that could be affected by those joint holdings.
Partial acquisitions that do not result in control may nevertheless present significant competitive
concerns. The acquisition of a minority position may permit influence of the target firm, implicate
strategic decisions of the acquirer with respect to its investment in other firms, or change incentives so
as to otherwise dampen competition. The post-acquisition relationship between the parties and the
independent incentives of the parties outside the acquisition may be important in determining whether
the partial acquisition may substantially lessen competition. Such partial acquisitions are subject to the
same legal standard as any other acquisition.53
The Agencies recognize that cross-ownership and common ownership can reduce competition by
softening firms’ incentives to compete, even absent any specific anticompetitive act or intent. While the
Agencies will consider any way in which a partial acquisition may affect competition, they generally
focus on three principal effects:
First, a partial acquisition can lessen competition by giving the partial owner the ability to
influence the competitive conduct of the target firm. 54 For example, a voting interest in the target firm or
specific governance rights, such as the right to appoint members to the board of directors, influence
capital budgets, determine investment return thresholds, or select particular managers, can create such
influence. Additionally, a nonvoting interest may, in some instances, provide opportunities to prevent,
delay, or discourage important competitive initiatives, or otherwise impact competitive decision making.
Such influence can lessen competition because the partial owner could use its influence to induce the
target firm to compete less aggressively or to coordinate its conduct with that of the acquiring firm.
Second, a partial acquisition can lessen competition by reducing the incentive of the acquiring
firm to compete.55 Acquiring a minority position in a rival might blunt the incentive of the partial owner
to compete aggressively because it may profit through dividend or other revenue share even when it
loses business to the rival. For example, the partial owner may decide not to develop a new product
feature to win market share from the firm in which it has acquired an interest, because doing so will

53

See United States v. E. I. du Pont de Nemours & Co., 353 U.S. 586, 592 (1957) (“[A]ny acquisition by one corporation of
all or any part of the stock of another corporation, competitor or not, is within the reach of [Section 7 of the Clayton Act]
whenever the reasonable likelihood appears that the acquisition will result in a restraint of commerce or in the creation of a
monopoly of any line of commerce.”).
54
See United States v. Dairy Farmers of Am., Inc., 426 F.3d 850, 860-61 (6th Cir. 2005).
55
See Denver & Rio Grande v. United States, 387 U.S. 485, 504 (1967) (identifying Section 7 concerns with a 20%
investment).

28

reduce the value of its investment in its rival. This reduction in the incentive of the acquiring firm to
compete arises even when it cannot directly influence the conduct or decision making of the target firm.
Third, a partial acquisition can lessen competition by giving the acquiring firm access to nonpublic, competitively sensitive information from the target firm. Even absent any ability to influence the
conduct of the target firm, access to competitively sensitive information can substantially lessen
competition through other mechanisms. For example, it can enhance the ability of the target and the
partial owner to coordinate their behavior and make other accommodating responses faster and more
targeted. The risk of coordinated effects is greater if the transaction also facilitates the flow of
competitively sensitive information from the investor to the target firm. Even if coordination does not
occur, the partial owner may use that information to preempt or appropriate a rival’s competitive
business strategies for its own benefit. If rivals know their efforts to win trading partners can be
immediately appropriated, they may see less value in taking competitive actions in the first place,
resulting in a lessening of competition.
*

*

*

The analyses above address common scenarios that the Agencies use to assess the risk that a
merger may substantially lessen competition or tend to create a monopoly. However, they are not
exhaustive. The Agencies have in the past encountered mergers that lessen competition through
mechanisms not covered above. For example:
A. A merger that would enable firms to avoid a regulatory constraint because that constraint was
applicable to only one of the merging firms;
B. A merger that would enable firms to exploit a unique procurement process that favors the
bids of a particular competitor who would be acquired in the merger; or
C. In a concentrated market, a merger that would dampen the acquired firm’s incentive or
ability to compete due to the structure of the acquisition or the acquirer.
As these scenarios and these Guidelines indicate, a wide range of evidence can show that a
merger may lessen competition or tend to create a monopoly. Whatever the sources of evidence, the
Agencies look to the facts and the law in each case.
Whatever frameworks the Agencies use to identify that a merger may substantially lessen
competition or tend to create a monopoly, they also examine rebuttal evidence under the framework in
Section 3.

29

3. Rebuttal Evidence Showing that No Substantial Lessening of
Competition is Threatened by the Merger
The Agencies may assess whether a merger may substantially lessen competition or tend to
create a monopoly based on a fact-specific analysis under any one or more of the Guidelines discussed
above.56 The Supreme Court has determined that analysis should consider “other pertinent factors” that
may “mandate[] a conclusion that no substantial lessening of competition [is] threatened by the
acquisition.”57 The factors pertinent to rebuttal depend on the nature of the threat to competition or
tendency to create a monopoly resulting from the merger.
Several common types of rebuttal and defense evidence are subject to legal tests established by
the courts. The Agencies apply those tests consistent with prevailing law, as described below.

3.1.

Failing Firms

When merging parties suggest the weak or weakening financial position of one of the merging
parties will prevent a lessening of competition, the Agencies examine that evidence under the “failing
firm” defense established by the Supreme Court. This defense applies when the assets to be acquired
would imminently cease playing a competitive role in the market even absent the merger.
As set forth by the Supreme Court, the failing firm defense has three requirements:
A. “[T]he evidence show[s] that the [failing firm] face[s] the grave probability of a business
failure.”58 The Agencies typically look for evidence in support of this element that the
allegedly failing firm would be unable to meet its financial obligations in the near future.
Declining sales and/or net losses, standing alone, are insufficient to show this requirement.
B. “The prospects of reorganization of [the failing firm are] dim or nonexistent.” 59 The
Agencies typically look for evidence suggesting that the failing firm would be unable to
reorganize successfully under Chapter 11 of the Bankruptcy Act, taking into account that
“companies reorganized through receivership, or through [the Bankruptcy Act] often
emerge[] as strong competitive companies.” 60 Evidence of the firm’s actual attempts to
resolve its debt with creditors is important.
C. “[T]he company that acquires the failing [firm] or brings it under dominion is the only
available purchaser.”61 The Agencies typically look for evidence that a company has made
unsuccessful good-faith efforts to elicit reasonable alternative offers that pose a less severe
danger to competition than does the proposed merger. 62
56

See United States v. AT&T, Inc., 916 F.3d at 1032.
See United States v. Gen. Dynamics Corp., 415 U.S. 486, 498 (1974); Baker Hughes, 908 F.2d at 990 (quoting General
Dynamics and describing its holding as permitting rebuttal based on a “finding that ‘no substantial lessening of competition
occurred or was threatened by the acquisition’”).
58
Citizen Publ’g Co. v. United States, 394 U.S. 131, 138 (1969).
59
Id.
60
Id.
61
Id. at 136-39 (quoting Int’l Shoe Co. v. FTC, 280 U.S. 291, 302 (1930)).
62
Any offer to purchase the assets of the failing firm for a price above the liquidation value of those assets will be regarded as
a reasonable alternative offer. Parties must solicit reasonable alternative offers before claiming that the business is failing.
57

30

Although merging parties sometimes argue that a poor or weakening position should serve as a
defense even when it does not meet these elements, the Supreme Court has “confine[d] the failing
company doctrine to its present narrow scope.” 63 The Agencies evaluate evidence of a failing firm
consistent with this prevailing law.64

3.2.

Entry and Repositioning

Merging parties sometimes raise a rebuttal argument that a reduction in competition resulting
from the merger would induce entry or repositioning65 into the relevant market, preventing the merger
from substantially lessening competition or tending to create a monopoly in the first place. This
argument posits that a merger may, by substantially lessening competition, make the market more
profitable for the merged firm and any remaining competitors, and that this increased profitability may
induce new entry. To evaluate this rebuttal evidence, the Agencies assess whether entry induced by the
merger would be “timely, likely, and sufficient in its magnitude, character, and scope to deter or
counteract the competitive effects of concern.” 66
Timeliness. To show that no substantial lessening of competition is threatened by a merger, entry
must be rapid enough to replace lost competition before any effect from the loss of competition due to
the merger may occur. Entry in most industries takes a significant amount of time and is therefore
insufficient to counteract any substantial lessening of competition that is threatened by a merger.
Moreover, the entry must be durable: an entrant that does not plan to sustain its investment or that may
exit the market would not ensure long-term preservation of competition.
Likelihood. Entry induced by lost competition must be so likely that no substantial lessening of
competition is threatened by the merger. Firms make entry decisions based on the market conditions
they expect once they participate in the market. If the new entry is sufficient to counteract the merger’s
effect on competition, the Agencies analyze why the merger would induce entry that was not planned in
pre-merger competitive conditions.
The Agencies also assess whether the merger may increase entry barriers. For example, the
merging firms may have a greater ability to discourage or block new entry when combined than they
would have as separate firms. Mergers may enable or incentivize unilateral or coordinated exclusionary

Liquidation value is the highest value the assets could command outside the market. If a reasonable alternative offer was
rejected, the parties cannot claim that the business is failing.
63
Citizen Publ’g, 394 U.S. at 139.
64
The Agencies do not normally credit claims that the assets of a division would exit the relevant market in the near future
unless: (1) applying cost allocation rules that reflect true economic costs, the division has a persistently negative cash flow on
an operating basis, and such negative cash flow is not economically justified for the firm by benefits such as added sales in
complementary markets or enhanced customer goodwill; and (2) the owner of the failing division has made unsuccessful
good-faith efforts to elicit reasonable alternative offers that would keep its assets in the relevant market and pose a less severe
danger to competition than does the proposed acquisition. Because firms can allocate costs, revenues, and intra-company
transactions among their subsidiaries and divisions, the Agencies require evidence that is not solely based on management
plans that could have been prepared for the purpose of demonstrating negative cash flow or the prospect of exit from the
relevant market.
65
Repositioning is a supply-side response that is evaluated like entry. If repositioning requires movement of assets from other
markets, the Agencies will consider the costs and competitive effects of doing so. Repositioning that would reduce
competition in the markets from which products or services are moved is not a cognizable rebuttal for a lessening of
competition in the relevant market.
66
FTC v. Sanford Health, 926 F.3d 959, 965 (8th Cir. 2019).

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strategies that make entry more difficult. Entry can be particularly challenging when a firm must enter at
multiple levels of the market at sufficient scale to compete effectively.
Sufficiency. Even where timely and likely, the prospect of entry may not effectively prevent a
merger from threatening a substantial lessening of competition. Entry may be insufficient due to a wide
variety of constraints that limit an entrant’s effectiveness as a competitor. Entry must at least replicate
the scale, strength, and durability of one of the merging parties to be considered sufficient. The Agencies
typically do not credit entry that depends on lessening competition in other markets.
As part of their analysis, the Agencies will consider the economic realities at play. For example,
lack of successful entry in the past will likely suggest that entry may be slow or difficult. Recent
examples of entry, whether successful or unsuccessful, provide the starting point for identifying the
elements of practical entry barriers and the features of the industry that facilitate or interfere with entry.
The Agencies will also consider whether the parties’ entry arguments are consistent with the rationale
for the merger or imply that the merger itself would be unprofitable.

3.3.

Procompetitive Efficiencies

The Supreme Court has held that “possible economies [from a merger] cannot be used as a
defense to illegality.”67 Competition usually spurs firms to achieve efficiencies internally, and firms also
often work together using contracts short of a merger to combine complementary assets without the full
anticompetitive consequences of a merger.
Merging parties sometimes raise a rebuttal argument that, notwithstanding other evidence that
competition may be lessened, evidence of procompetitive efficiencies shows that no substantial
lessening of competition is in fact threatened by the merger. This argument asserts that the merger
would not substantially lessen competition in any relevant market in the first place. 68 When assessing
this argument, the Agencies will not credit vague or speculative claims, nor will they credit benefits
outside the relevant market that would not prevent a lessening of competition in the relevant market.
Rather, the Agencies examine whether the evidence 69 presented by the merging parties shows each of
the following:
Merger Specificity. The merger will produce substantial competitive benefits that could not be
achieved without the merger under review.70 Alternative ways of achieving the claimed benefits are
considered in making this determination. Alternative arrangements could include organic growth of one
of the merging firms, contracts between them, mergers with others, or a partial merger involving only
those assets that give rise to the procompetitive efficiencies.

67

Phila. Nat’l Bank, 374 U.S. at 371; Procter & Gamble Co., 386 U.S. at 580 (“Congress was aware that some mergers
which lessen competition may also result in economies but it struck the balance in favor of protecting competition.”).
68
United States v. Anthem, 855 F.3d 345, 353-55 (D.C. Cir. 2017) (although efficiencies not a “defense” to antitrust liability,
evidence sometimes used “to rebut a prima facie case”); Saint Alphonsus Medical Center-Nampa, 778 F.3d at 791 (“The
Clayton Act focuses on competition, and the claimed efficiencies therefore must show that the prediction of anticompetitive
effects from the prima facie case is inaccurate.”).
69
In general, evidence related to efficiencies developed prior to the merger challenge is much more probative than evidence
developed during the Agencies’ investigation or litigation.
70
If inter-firm collaborations are achievable by contract, they are not merger specific. The Agencies will credit the merger
specificity of efficiencies only in the presence of evidence that a contract to achieve the asserted efficiencies would not be
practical. See Anthem, 855 F.3d at 357.

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Verifiability. These benefits are verifiable, and have been verified, using reliable methodology
and evidence not dependent on the subjective predictions of the merging parties or their agents.
Procompetitive efficiencies are often speculative and difficult to verify and quantify, and efficiencies
projected by the merging firms often are not realized. If reliable methodology for verifying efficiencies
does not exist or is otherwise not presented by the merging parties, the Agencies are unable to credit
those efficiencies.
Prevents a Reduction in Competition. To the extent efficiencies merely benefit the merging
firms, they are not cognizable. The merging parties must de

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A6c5037653525d3dc. Public record. Not legal advice.