Big Tech Merger Oversight Enhanced
Wednesday saw the unveiling of new draft guidelines by U.S. antitrust enforcement agencies. These guidelines propose a stronger examination of proposed mergers involving tech giants such as Amazon.com (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL)'s Google. The Biden administration’s firmer stance on mergers has already been displayed through a series of assertive challenges, despite suffering two court losses last week.
Upcoming Legal Challenges
Several of these challenges are set to go to court in the upcoming months. These include the Justice Department's opposition to the JetBlue-Spirit acquisition. The draft, while not directly naming specific deals, referred to Amazon.com's acquisition of Ring, a video doorbell company, in 2018 as an example of the type of deals that should face stricter scrutiny.
Platform Operator's Conflict of Interest
The guidelines argue that a platform operator who also participates on the platform faces a conflict of interest. This can lead to favoritism towards its products and services, thereby undermining competition.
Ensuring Market Variety
Furthermore, the draft emphasizes that a merger should neither eliminate a potential competitor in a saturated market nor lead to a situation where a firm purchases a company that provides crucial inputs to its competitors.
Addressing Labor Issues in Mergers
The Biden administration's antitrust enforcement hasn’t overlooked labor issues. The guidelines underline that a merger between employers that might lessen competition for workers could negatively impact wages, slow wage growth, or worsen working conditions and benefits.
Antitrust Enforcement Evolution
These new guidelines mirror how the FTC and Justice Department currently enforce laws against illegal mergers. They are set to replace the guidelines from 2010 on companies acquiring competitors and the 2020 guidelines on companies merging with suppliers.
In an executive order issued in mid-2021, President Joe Biden called for the guidelines to be updated. They will be open for public comment for 60 days before being finalized.