New merger guidelines could help with a lot of things

Like, you know, fairness, justice, and in general over time a better deal for almost everyone.

A major shift is afoot in the federal government’s stance on big business. Earlier this year, the two agencies in charge of enforcing the antitrust laws, the Federal Trade Commission and Department of Justice, announced that they plan to revise their merger guidelines. That may sound like a minor technicality, but in fact, it heralds a sea change in the workings of antitrust law. The new guidelines, expected later this year, will likely make it much harder for large corporations to amass power by buying other companies. Over time the guidelines will also shape how judges understand and apply the antitrust laws in their rulings.

Had this shift in enforcement policy come about years ago, Americans wouldn’t be contending with a host of debilitating problems caused by consolidation. Mergers in the food industry, for example, have allowed dominant meatpackers and other processors to slash the incomes of farmers and food workers, while raising grocery prices. Mergers among manufacturers of everything from appliances to beer cans have led to the shuttering of plants, costing communities thousands of jobs. Hospital mergers have sent health care costs soaring, while dozens of rural communities have lost their hospitals altogether, as big hospital chains bought and then closed small facilities. Meanwhile, Amazon, Facebook, and Google have used acquisitions to thwart potential competition and lock in their dominance, to the detriment of small businesses, local newspapers, and others seeking to communicate or sell products online.

New merger guidelines hold the promise of putting a stop to these kinds of domineering moves by powerful corporations. But their potential isn’t limited to simply preventing America’s monopoly problem from getting worse. Strong merger enforcement would create a fairer playing field for small businesses and allow more startups to gain a toehold, deconcentrating industries over time. And as we’ve noted, the merger guidelines provide a framework for understanding the antitrust laws that history shows can significantly influence how the courts apply the law, and not only in merger cases. - ILSR