The Federal Trade Commission’s (FTC) recent challenge to a high-profile merger on the grounds of potential coordinated effects—even after accepting a conduct remedy—marks a pivotal shift in the landscape of U.S. antitrust enforcement. This case signals that theoretical harm, not just clear evidence of market dominance, can now be enough to derail major deals.
What Happened
The FTC’s action was driven by concerns that the merger could foster anti-competitive behavior among remaining companies in the market. Historically, the agency has looked for concrete evidence of harm, such as actual or attempted collusion, before moving to block a merger. In this instance, however, the FTC determined that the increased likelihood of coordinated effects—where competitors might tacitly or explicitly collude—was enough to justify intervention. Even though the merging parties offered a conduct remedy to address these risks, the FTC concluded that the potential for future harm warranted blocking the deal.
The agency settled the case with a consent order that imposed a behavioral remedy, rather than the more traditional structural remedy such as divestiture. This is notable, as the FTC has recently expressed skepticism toward resolving enforcement actions with conduct remedies, preferring structural solutions. Nonetheless, the Commission found this to be a rare case where a behavioral remedy was appropriate, while also emphasizing its ability to closely monitor compliance with the consent order.
Why This Matters
This decision represents a significant shift in the FTC’s regulatory approach:
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Theoretical risks of anti-competitive coordination are now central to merger evaluations, not just actual market dominance or past collusion.
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Companies can expect heightened scrutiny of their deals, even in the absence of clear evidence of anti-competitive behavior.
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The FTC’s willingness to block a merger based on potential coordinated effects—even when a conduct remedy is on the table—raises the bar for what merging parties must prove to regulators.
For businesses, this means that even well-intentioned remedies may not be sufficient to address regulatory concerns if the risk of future coordination is deemed too high.
How Businesses Can Stay Compliant
To navigate this evolving regulatory environment, companies should:
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Conduct in-depth market analysis before initiating a merger, paying close attention to any history of collusion or coordinated activity in the industry.
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Develop robust compliance programs that proactively address potential antitrust issues and demonstrate a commitment to fair competition.
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Engage with legal experts early in the merger process to identify and mitigate potential risks, including those related to coordinated effects.
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Stay informed on FTC guidance and review recent consent orders and enforcement trends through the FTC’s merger review resources and guidance on negotiating merger remedies.
The Road Ahead
The FTC’s latest enforcement action underscores a new era in antitrust review, where the potential for coordinated effects can be as decisive as actual market power. Companies contemplating mergers must adapt to this heightened scrutiny and ensure that their strategies, compliance programs, and legal counsel are equipped to address both real and theoretical risks. By doing so, businesses can better position themselves to navigate the complexities of modern merger reviews and avoid regulatory setbacks