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FTC restores practice of restricting anticompetitive mergers

The Federal Trade Commission has announced that it is restoring its long-established practice of routinely restricting future acquisitions for merging parties that pursue anticompetitive mergers.

The Prior Approval Statement issued yesterday puts industry on notice that the FTC’s merger enforcement orders will once again require acquisitive firms to obtain prior approval from the agency before closing any future transaction affecting each relevant market for which a violation was alleged, for a minimum of ten years.

In July 2021, the Commission rescinded a 1995 policy statement that for decades had fueled consolidation by preventing the agency from imposing these merger restrictions. The application of the Prior Approval Policy Statement will protect consumers and deter merging parties from pursuing anticompetitive deals. The consequences of attempting an anticompetitive deal will be more severe and the bar for consummating further anticompetitive acquisitions will be higher.

Parties settling an anticompetitive deal with a consent order will need the Commission’s permission to close any further acquisition in an affected market, and sometimes in broader markets depending on the circumstances, for at least ten years. The FTC will weigh a number of factors in determining the scope of a prior approval provision, including the nature of the transaction, the level of market concentration and degree to which the transaction increases market concentration, the degree of pre-merger market power, the parties’ history of acquisitiveness, and evidence of anticompetitive market dynamics. The Commission may also seek prior approvals even when parties abandon a transaction.

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