New Merger Guidelines Should Keep the Consumer Welfare Standard

Recent statements by the heads of the Federal Trade Commission and Department of Justice suggest that new merger guidelines may replace the tried-and-tested consumer welfare standard with a series of alternate goals. Proponents of such a shift see a need to promote goals other than consumer welfare and believe the consumer welfare standard is inadequate to enforce against mergers resulting in certain types of harms. We disagree. Shifting away from the consumer welfare standard will necessarily harm consumers, resulting in higher prices and lower output. In contrast, sticking with the consumer welfare standard is not biased toward or against enforcement, is consistent with enforcement against a variety of types of harm (as reflected in the agencies’ recent enforcement decisions), and provides ample room for greater enforcement if that is what the agencies desire. Shifting away from the consumer welfare standard would also replace a clear standard with a series of vague standards, undermining the agencies’ credibility, which would also harm consumers.

By Mark Israel, Jonathan Orszag & Jeremy Sandford^[1]

I. INTRODUCTION

The Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) are preparing to revise the 2010 Horizontal Merger Guidelines (“HMG”) and the 2020 Vertical Merger Guidelines (“VMG”). To the extent the revisions incorporate new scholarship and accumulated enforcement experience, we applaud efforts to update the public on su