Today, the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) (collectively, the “Agencies”) jointly released the 2023 Merger Guidelines . The 2023 Merger Guidelines outline the “factors and frameworks the agencies utilize when reviewing mergers and acquisitions,” including both horizontal and vertical transactions. The 2023 Merger Guidelines finalize the draft merger guidelines that were released in July 2023 and effectively update and replace the 2010 Horizontal merger Guidelines and Vertical Merger Guidelines that were issued in 2020 and later rescinded by the FTC in 2021. The 2023 Merger Guidelines are not law, but past merger guidelines have been persuasively cited by courts, and they give insight as to how the Agencies view the competitive impact of transactions.
Given the Agencies’ focus on competition in the Life Sciences space, companies should be aware of all of the factors and frameworks outlined in the 2023 Merger Guidelines. In particular, certain components of the 2023 Merger Guidelines reflect recent enforcement trends, including the threshold for when the Agencies consider certain transactions presumptively illegal, an emphasis on elimination of potential entrants in concentrated markets, a focus on how transactions will affect access to products or services used by rivals, an examination of whether a transaction furthers an already-dominant market position or is part of a trend towards consolidation, and concerns with both cross-ownership and common ownership in firms that have competitive relationships.
On September 21, 2023, the Federal Trade Commission sued U.S. Anesthesia Partners Inc. and Welsh, Carson, Anderson & Stowe XI L.P., among other private equity funds, in the United States District Court for the Southern District of Texas under the antitrust laws. Specifically, FTC alleges that the defendants engaged in an anti-competitive scheme to consolidate anesthesia practices in Texas and to force other independent anesthesia groups into price-setting arrangements that violated Section 2 of the Sherman Act, Section 7 of the Clayton Act and Section 5 of the FTC Act.
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The Antitrust Division of the Department of Justice (DOJ) has indicated a recent interest in enforcing Section 8 of the Clayton Act, which prohibits individuals from serving on boards of competing corporations, known as “interlocking directorates.” (See 15 U.S.C. § 19.) Assistant Attorney General Jonathan Kanter has called Section 8 an “important but underenforced” antitrust law. After DOJ announced a focus on Section 8, the agency reported that seven board members announced their resignations in response. Since then, DOJ has continued its focus on Section 8, issuing civil investigative demands and confidential investigation letters to firms, including private equity funds and investors. Life sciences companies, and companies that invest in the life sciences industry, should be on the lookout for interlocking directorates, as there is empirical evidence suggesting that the industry is particularly at risk of a Section 8 investigation.
Read the full text of this Alert on the firm website.