On July 19, 2023, the United States Federal Trade Commission and the United States Department of Justice (together, the “Agencies”) released draft Merger Guidelines (the “Draft Guidelines”) for public comment. Once finalized, the Draft Guidelines, which are designed to help the public, business community, practitioners and courts understand how the Agencies identify potentially illegal mergers, will replace the US Horizontal Merger Guidelines issued in 2010 and the US Vertical Merger Guidelines issued in 2020.

According to the Press Release issued by the Agencies, “[t]he goal of this update is to better reflect how the agencies [currently] determine a merger’s effect on competition in the modern economy and evaluate proposed mergers under the law”. Notably, the Draft Guidelines reflect the Agencies’ more aggressive approach to merger enforcement under the Biden administration and, in doing so, describe several novel theories of harm that have been raised in recent merger investigations and advanced with mixed success in recent proceedings before the courts.

Unlike the 2010 Horizontal Merger Guidelines, which were based primarily on economic theory, the Draft Guidelines rely to a large extent on US Supreme Court decisions from the 1960s and 1970s. Perhaps intentionally, the Agencies fail to mention more recent case law that is inconsistent with or does not support various positions taken in the Draft Guidelines.

Thirteen Guidelines

According to the Draft Guidelines, the Agencies apply the 13 guidelines or principles described below when evaluating mergers. A merger may raise concerns in the US where it implicates one or more of these guidelines, which, as noted above, reflect the Agencies’ current approach to merger enforcement.

  • Guideline 1: Mergers Should Not Significantly Increase Concentration in Highly Concentrated Markets. Concentration refers to the number and relative size of rivals competing to offer a product or service to a group of customers. The Agencies examine whether a merger between competitors would significantly increase concentration and result in a highly concentrated market. If so, the Agencies presume that a merger may substantially lessen competition based on market structure alone. [underlining added]
  • Guideline 2: Mergers Should Not Eliminate Substantial Competition between Firms. The Agencies examine whether competition between the merging parties is substantial, since their merger will necessarily eliminate competition between them.
  • Guideline 3: Mergers Should Not 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 presume that the merger may substantially lessen competition. In a market that is not yet highly concentrated, the Agencies investigate whether facts suggest a greater risk of coordination than market structure alone would suggest. [underlining added]
  • Guideline 4: Mergers Should Not 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 Should Not Substantially Lessen Competition by Creating a Firm That Controls Products or Services That Its Rivals May Use to Compete. When a merger involves products or services rivals use to compete, the Agencies examine whether the merged firm can control access to those products or services to substantially lessen competition and whether they have the incentive to do so.
  • Guideline 6: Vertical Mergers Should Not Create Market Structures That Foreclose Competition. The Agencies examine how a merger would restructure a vertical supply or distribution chain. At or near a 50% share, market structure alone indicates the merger may substantially lessen competition. Below that level, the Agencies examine whether the merger would create a “clog on competition…which deprives rivals of a fair opportunity to compete.” [underlining added]
  • Guideline 7: Mergers Should Not 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. 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 8: Mergers Should Not Further a Trend Toward Concentration. If a merger occurs during a trend toward concentration, the Agencies examine whether further consolidation may substantially lessen competition or tend to create a monopoly. 
  • Guideline 9: 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. 
  • Guideline 10: 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 carefully when applying the other guidelines.
  • Guideline 11: When a Merger Involves Competing Buyers, the Agencies Examine Whether It May Substantially Lessen Competition for Workers or Other Sellers. Section 7 of the Clayton Act protects competition among buyers and prohibits mergers that may substantially lessen competition in any relevant market. The Agencies therefore apply these guidelines to assess whether a merger between buyers, including employers, may substantially lessen competition or tend to create a monopoly.
  • Guideline 12: When an Acquisition Involves Partial Ownership or Minority Interests, the Agencies Examine Its Impact on Competition. Acquisitions of partial control or common ownership may in some situations substantially lessen competition.
  • Guideline 13: Mergers Should Not Otherwise Substantially Lessen Competition or Tend to Create a Monopoly. The guidelines are not exhaustive of the ways that a merger may substantially lessen competition or tend to create a monopoly. 

While each of the above guidelines is important, there are several that warrant further discussion, including those relating to market concentration, structural presumptions, dominance, labour market considerations. Each of these topics is discussed briefly below.

Market Concentration and Structural Presumptions

Market shares and concentration levels have always been an integral part of the Agencies’ merger review process. However, the Draft Guidelines reflect a vastly different approach from that found in prior guidance issued by the Agencies.

First, the Draft Guidelines include several structural presumptions pursuant to which mergers may be found presumptively illegal based solely on pre-defined market shares or concentration levels. In contrast, both the 2010 Horizontal Merger Guidelines and the 2020 Vertical Merger Guidelines state that “[t]he Agencies evaluate market shares and concentration [levels] in conjunction with other reasonably available and reliable evidence for the ultimate purpose of determining whether a merger may substantially lessen competition”. This is similar to the approach in Canada, in which a merger cannot be found to result in a substantial lessening or prevention of competition “solely on the basis of evidence of concentration or market share”.

Second, the Draft Guidelines significantly lower the concentration levels at which mergers are considered presumptively illegal. In particular, the Draft Guidelines note that markets with a post-merger Herfindahl-Hirschman Index (“HHI”) greater than 1,800 are “highly concentrated” and that a merger is considered presumptively illegal where the post-merger HHI is greater than 1,800 and the transaction increases the HHI by more than 100. These are the levels included in the 1982 Horizontal Merger Guidelines and the 1992 Horizontal Merger Guidelines. In contrast, the 2010 Horizontal Merger Guidelines defined “highly concentrated markets” as those with an HHI above 2,500 and stated that “[m]ergers resulting in highly concentrated markets that involve an increase in the HHI of more than 200 points will be presumed to be likely to enhance market power”.

Third, the Draft Guidelines include new market share presumptions for both horizontal mergers and vertical mergers. For example, horizontal mergers will be considered presumptively illegal when the merging parties’ combined market share is greater than 30% and the post-merger HHI in the relevant market increases by over 100, while vertical mergers will be considered presumptively illegal when the foreclosure share is above 50%. Notably, the Canadian Merger Enforcement Guidelines (the “MEGs”) include a 35% safe-harbour threshold for horizontal mergers and do not include any market share threshold for vertical mergers.

We note that the Canadian Competition Bureau (the “Bureau”) has recently stated that it is difficult to prove that a merger is likely to result in a substantial prevention or lessening of competition (an “SPLC”) and it has suggested that “simplification is required”. To achieve this simplification, the Bureau has recommended the use of structural presumptions, which, like those in the Draft Guidelines, would shift the burden onto the merging parties to prove why a merger that significantly increases concentration would not result in an SPLC in the relevant market. However, it is not clear that the use of structural presumptions would simplify the process and result in meaningful cost savings, whether in Canada or the United States, as market definition would in most cases continue to be a hotly contested issue between the parties. This point was eloquently captured by Deborah Feinstein, a former director of the Federal Trade Commission, who recently stated (pay wall) as follows: “So much of the fights we have had have been about market definition. One doesn’t get to market shares and … presumptions and burden shifting until we have defined the market, and that is really much of where the ballgame is in most of these cases.”


According to the Draft Guidelines, the Agencies will consider whether one of the merged firms already has a dominant position and, if so, whether and to what extent the merger may entrench or extend that dominant position. The term “dominant position” is not used in the current US merger guidelines or the MEGs. However, “dominant position” is often used interchangeably with “market power”. Market power is commonly understood to be the ability to raise prices above competitive levels or to reduce non-price dimensions of competition such as quality below competitive levels. The stated “unifying theme” of the 2010 Horizontal Merger Guidelines “is that mergers should not be permitted to create, enhance, or entrench market power or to facilitate its exercise”. Similarly, the MEGs state that mergers that result in an SPLC are mergers “that are likely to create, maintain or enhance the ability of the merged entity … to exercise market power”.

The Draft Guidelines identify “dominant position” as a distinct rather than unifying analytical principle for identifying unlawful mergers. To determine whether one of the merging firms already has a dominant position, the Agencies look to whether (a) there is direct evidence that one or both merging firms has the power to raise price, reduce quality or otherwise impose or obtain terms that they could not obtain but for that dominance – seemingly, a “market power” test or (b) one of the merging firms possesses at least a 30% share of the relevant market a new presumptive “dominant position” or “market power” threshold.

In assessing whether a proposed merger may entrench a dominant position, the Agencies will consider whether the merger will increase barriers to entry, increase switching costs, interfere with use of competitive alternatives, deprive rivals of scale economies or network effects, or eliminate a nascent competitive threat. According to the Draft Guidelines, the Agencies “take particular care to preserve opportunities for deconcentration during technological shifts” that may reduce barriers to entry. In considering whether a merger may extend a dominant position, the Agencies look at whether the merged firm might leverage its dominant position by tying, bundling or “otherwise linking sales of two products” and thereby exclude rival firms and substantially lessen competition in a related market.

Labour Market Considerations

US case law has recognized that “[a] merger between competing buyers may harm sellers just as a merger between competing sellers may harm buyers”. Consistent with this position, the Draft Guidelines note that “the Agencies will analyze labor market competition on a case by case basis”. In fact, a recent statement issued by FTC Commissioner Alvaro Bedoya, joined by Chair Lina Khan and Commissioner Rebecca Kelly Slaughter, goes further, noting that Draft Guidelines “will make the consideration of workers…a priority in merger enforcement”.

Significantly, the Draft Guidelines indicate that labour markets frequently have characteristics that can exacerbate the competitive effects of a merger between competing employers. For example, the Draft Guidelines state that “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” and that “the individual needs of workers may limit the geographical and work scope of the jobs that are competitive substitutes”. In light of these and other characteristics, labour markets are often relatively narrow.

Separately, the Draft Guidelines note that the features of labour markets may in some cases put firms in dominant positions. To assess this dominance in labour markets, the Agencies often examine the merging firms’ power to cut or freeze wages, exercise increased leverage in negotiations with workers, or generally degrade benefits and working conditions without prompting workers to quit.

Historically, labour market considerations have not had a prominent role in the Canadian merger review process. However, both the Canadian government and the Bureau have suggested that such considerations should be given a more central role in competition analyses, including in the merger review process, whether through amendments to the Competition Act or otherwise. In this regard, the Draft Guidelines will likely provide significant insight into how the Bureau will consider labour-related issues moving forward.


The Draft Guidelines reflect a more aggressive approach to merger enforcement than that included in prior guidance issued by the Agencies. That said, several commentators have suggested that the Draft Guidelines may not have an obvious impact on merger review in the United States in the short-term as the Agencies are already using the concepts and approaches set out in the guidelines, including those relating to market concentration, structural presumptions, dominance and labour market considerations. However, it remains to be seen whether and to what extent US courts will embrace the Draft Guidelines, particularly since they include novel concepts, cite to case law developed more than half a century ago and fail to mention more recent case law that is inconsistent with or does not support them. In addition, unlike prior versions of the merger guidelines, the Draft Guidelines are solely the product of the Democratic Biden administration as there are currently no Republican members of the FTC.

From a Canadian perspective, there are significant differences between the Draft Guidelines and the MEGs, which were last revised in October 2011. For example, while the Draft Guidelines indicate that horizontal mergers will be considered presumptively illegal when the merging parties have a 30% share of the relevant market, the MEGs state that “[t] he Commissioner generally will not challenge a [horizontal] merger on the basis of a concern related to the unilateral exercise of market power when the post‑merger market share of the merged firm would be less than 35 percent”. Given that the Bureau has historically sought to align the Canadian merger review process with that of the United States, it may be that the Draft Guidelines foreshadow potential changes to the MEGs – particularly if the changes to the merger review process outlined in the Bureau’s submission in response to the Government of Canada’s discussion paper on the Future of Competition Policy in Canada and summarized in a prior blog post are included in the next round of amendments to the Competition Act.

If you have questions about the merger review process, you can reach out to any member of Fasken’s Competition, Marketing & Foreign Investment group. Our group has significant experience advising clients on all aspects of Canadian competition law.

The information and guidance provided in this blog post does not constitute legal advice and should not be relied on as such. If legal advice is required, please contact a member Fasken’s Competition, Marketing & Foreign Investment group.