Startup Groups and Innovators Voice Caution and Concern about Potential “Merger Enforcement” Changes

By at 27 April, 2022, 3:40 pm

SBE Council Joins Allies in Submitting Comments to DOJ and FTC


The Federal Trade Commission (FTC) and U.S. Department of Justice’s Antitrust Division (DOJ) recently issued a joint agency Request for Information on Merger Enforcement, and SBE Council joined The App Association, Developers Alliance, Engine and TechNet on April 21 in submitting comments about potential action. The comments urged regulators to be sensitive in understanding how changes may impact the startup and innovator ecosystem. In the comments, the groups write that any proposed changes must be based on objective evidence and what is actually happening in the marketplace. As the groups noted in their comments:

“While we appreciate the RFI’s invitation to provide answers to questions posed in the RFI, the FTC and the DOJ must inform any updates made to the merger guidelines by an objective data-driven evidence base and avoid making policy-level decisions based on edge-use cases and hypotheticals. Today, empirical data demonstrates that industrial concentration in the U.S. economy has decreased over the past two decades. In considering any updates to merger enforcement guidelines, the FTC and the DOJ should be mindful to avoid framing mergers, especially vertical integrations, as inherently anticompetitive or as innately having a negative effect on consumers. Such assumptions stand in stark contrast to both objective evidence and the experiences of those we work with, and we strongly urge both the FTC and the DOJ to base its next steps on empirical evidence and developed caselaw.”

The comments also urge the FTC and the DOJ to:

● Maintain the distinction between vertical and horizontal mergers in enforcement guidance.

● Discourage the development of industry- or sector-specific merger enforcement guidance.

● Apply “a light touch and…careful and targeted improvements to be made to existing guidelines” if the guidelines are revisited, consistent with what was expressed in the comments, rather than a wholesale rewrite.

● Open proposed changes to public comment “before they are finalized, consistent with the agencies’ practices.”

This is a very important matter for the U.S. economy, our startup ecosystem, and consumers.  As the groups noted in their comments:

“The U.S. economy and consumers have benefited tremendously from the creativity of individuals when combined with the resources and institutional knowledge of businesses that acquire their innovations. A merger that helps produce better products or services for consumers is both a natural and beneficial end for some companies and is healthy from a competition policy perspective, a fact that existing merger enforcement guidance reflects. Any updates to the FTC and the DOJ merger enforcement guidelines therefore stand to deeply impact our dynamic communities and how they realize success.”

SBE Council, along with our allies, will continue to monitor developments on potential action, and advocate for the interest of America’s small businesses and innovative startups.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.


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