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The FTC's rules for mergers and acquisitions just got tougher


Federal agencies are getting a first look at a new rule book to help them evaluate the impact of mergers and acquisitions on competition. The guidelines help them enforce antitrust laws. Attorney General Merrick Garland says the update reflects, quote, "modern market realities." Joining us on the line is the chair of the Federal Trade Commission, Lina Khan. Now, these new market realities that the attorney general is talking about, is this about the digital online economy?

LINA KHAN: So this is about a whole set of ways in which our markets and our economy has changed, even over the last decade. So we've seen growing digitization and the expansion of platforms, which are now serving as key intermediaries. But we've also seen, for example, important research showing that labor markets have become more concentrated and that workers, as a result, are actually being paid less than they otherwise would. We've also seen these strategies where firms are doing roll ups of entire industries through serial acquisitions and buying up small businesses. So those are just some of the market realities that we're wanting to make sure this enforcement manual is addressing.

MARTÍNEZ: Is it likely that we would see fewer mergers approved under these new guidelines?

KHAN: So the goal of these guidelines is really to be clarifying what the law is. We really draw from the law that Congress wrote and the case law on the books and want to make sure that businesses and market participants are fully on notice about the various types of ways in which mergers can violate the laws that Congress passed.

MARTÍNEZ: So the guidelines are clarifications more than anything being rewritten.

KHAN: Exactly. These are not new law. They're not new rules. They're an enforcement manual that's reflecting the existing law and also noting how it would apply in particular settings, be it mergers that could harm workers, mergers involving platforms or digital markets and that sort of thing.

MARTÍNEZ: Who has wanted this to happen? Has there been a call for this?

KHAN: So this is part of a long tradition where both the Federal Trade Commission and the Antitrust Division periodically revisit these guidelines to make sure that they're really matching the realities of how businesses are growing and expanding and competing. So the last update was in 2010, and we looked at them and believed that markets have changed significantly over that period. And so they invited a update.

MARTÍNEZ: Now, in the past, the FTC based everything on consumer welfare. Is that standard retired now?

KHAN: So this document reflects the existing law. And the existing law says that illegal mergers can be harmful because they hurt workers, but they could also be harmful because they hurt entrepreneurs and startups or they hurt workers. And so these guidelines are making sure that we're really looking - taking a 360 view to understand all the potential risks.

MARTÍNEZ: How would you respond to critics who say that tightening regulations on business will hurt an economy that could still be at the risk of a recession?

KHAN: So open and fair competition has been a key pillar of America's economic success and business dynamism. We've seen, decade after decade, that competition is really key for producing breakthrough innovations and ensuring that America stays ahead globally. And so I have full faith that the laws that Congress passed prohibiting monopolies, prohibiting mergers that lessen competition are all going to serve those ultimate goals.

MARTÍNEZ: Now, a judge recently declined to let the FTC block the merger between Microsoft and the game maker, Activision Blizzard. Would anything in these guidelines now give you more power in that case?

KHAN: So again, this document is really about reflecting the existing law and providing more clarity to courts, to businesses, to citizens - in some ways already reflects what we are doing as we are looking at transactions, but we want to make sure that everybody is on full notice about all the legal precedent that is relevant as we're doing our analysis.

MARTÍNEZ: That's FTC chair Lina Khan. Thank you very much.

KHAN: Thanks for having me. Transcript provided by NPR, Copyright NPR.

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A Martínez
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.