International Competition Network Adopts Recommended Practices for Antitrust Merger Review | Practical Law

International Competition Network Adopts Recommended Practices for Antitrust Merger Review | Practical Law

An update on the adoption by the International Competition Network of "Recommended Practices" for substantive merger analysis by antitrust regulators.

International Competition Network Adopts Recommended Practices for Antitrust Merger Review

by PLC Corporate & Securities
Published on 03 May 2010 • USA (National/Federal)
An update on the adoption by the International Competition Network of "Recommended Practices" for substantive merger analysis by antitrust regulators.
On April 29, 2010, the DOJ's Antitrust Division announced the adoption of two "Recommended Practices" by the International Competition Network (ICN) for the analysis of mergers by antitrust authorities. The ICN, a network of 112 member agencies from 99 jurisdictions (including the US), meets annually to develop best practices in the regulation of competition. The FTC also noted its participation in this year's conference. The ICN's adoption of these Recommended Practices comes less than two weeks after the FTC released proposed Horizontal Merger Guidelines for antitrust review by the FTC and DOJ (see Legal Update, FTC Proposes Changes to Horizontal Merger Guidelines).
The new Recommended Practices for merger analysis address:
  • Identifying the market in merger review. The ICN recommended that agencies should generally address the competitive effects of a merger within "economically meaningful markets." The ICN also concluded that the "hypothetical monopolist" test should be used to determine the relevant market(s) in which to analyze the competitive effects of a merger.
  • "Failing firm" analysis. The ICN recommended that agencies carefully review the claims of the merging parties that a merger will not harm competition because the company being acquired would have exited the market even if the merger had not taken place.
The ICN's recommendations for use of a failing-firm analysis and reliance on a hypothetical-monopolist test are consistent with existing US practice and the FTC and DOJ's proposed guidelines. The recommendation that agencies address the competitive effects of a merger within economically meaningful markets, however, could be seen as diverging somewhat from the US agencies' proposal that identifying the market should no longer be considered the necessary first step of a merger analysis.
The ICN's Recommended Practices have immediate significance for practitioners advising on international transactions. The FTC and DOJ's proposed guidelines are not yet effective, with the comment period open through June 4, 2010.
For more information about US antitrust review, see Practice Note, US Antitrust Laws: Overview and Practice Note, How Antitrust Agencies Analyze M&A.