The Neo-Brandeisian Approach to Vertical Mergers – A Zipline to Oblivion?

In a major policy switch, federal antitrust agencies recently announced increased hostility to vertical mergers. Stated reasons include skepticism of their benefits and of remedies traditionally used to control their competitive risks. Based on the long enforcement history involving vertical mergers, the agencies’ concerns are materially overstated. Since February 2022, agency litigation threats led to voluntary termination of several deals, but the agencies lost both of the other cases that were tried. While subject to further appeal, the meticulous reasoning of each seems persuasive. When mergers do not involve competitors and the parties offer plausible business justifications, it takes sophisticated analysis, strong factual support and effective advocacy to explain to an objective decision maker why they pose antitrust concerns sufficient to justify prohibition. The agencies should consider the lessons of their recent defeats. Any new vertical merger policy should be based on a balanced, thorough and realistic assessment of the key relevant considerations: the competitive risks of vertical transactions, their potential competitive benefits, and the availability of limited conduct remedies to address the second-order competitive issues present in some transactions.

By Abbott B. Lipsky, Jr.^[1]

Neo-Brandeisians now have full control of both federal antitrust agencies, with strong support from Congressional Democrats, the President, and an amen corner of NGO’s (