Section 7 of the Clayton Act prohibits mergers and acquisitions when the effect “may be substantially to lessen competition, or to tend to create a monopoly.” The FTC and the DOJ have developed Merger Guidelines that set out the agencies’ analytical framework for assessing whether a transaction presents sufficient risk to warrant an enforcement action. When the Commission has “reason to believe” that a merger violates the antitrust laws, it may issue an administrative complaint and authorize a lawsuit in federal court to block the deal pending an administrative trial on the merits.
Merger law is generally forward-looking: it bars transactions that may harm competition. The premerger notification requirements of the Hart-Scott-Rodino Act allow the antitrust agencies to examine the likely effects of proposed mergers before they take place. This advance notice avoids the difficult and potentially ineffective “unscrambling of the eggs” once an anticompetitive deal has been consummated. The agencies also investigate some consummated mergers that subsequently appear to have harmed competition.
Each year, the FTC and Department of Justice review thousands of merger filings. For those deals requiring more in-depth investigation, the FTC has developed best practices to streamline the merger review process and more quickly identify deals that present competitive problems.
By law, all information provided to, or obtained by, the agencies in a merger investigation is confidential, and the agencies have very strict rules against disclosing it. These rules prevent the agencies from even disclosing the existence of an investigation. In some situations, however, the parties themselves may disclose their merger plans, and the FTC may then confirm the existence of an investigation.