Significant changes at the intersection of antitrust and administrative law
The Supreme Court’s changes to administrative law are creating uncertainty about new antitrust guidelines from federal regulators.
The Federal Trade Commission and the Antitrust Division of the United States Department of Justice will soon publish new common guidelines applicable to mergers which raise horizontal issues in the same market and to mergers which raise vertical issues in the same supply chain.
These guidelines will reflect major changes in the outlook of both organizations regarding the likelihood that a proposed merger or acquisition will lessen competition. They will also foreshadow the decisions of the two agencies to challenge the legality of many proposed mergers and acquisitions that they would not have challenged in the past.
As agencies apply the new guidelines in an effort to block proposed mergers and acquisitions, courts will have an opportunity to review the guidelines as applied in the context of particular cases. The courts have engaged in this review process for decades and have generally deferred to the agencies. The courts have rarely interrogates the validity of the agency’s guidelines, and they generally defer to the agencies’ application of the guidelines to the facts of each case
When federal antitrust agencies release the next set of merger guidelines, they will find that administrative law has changed in ways that will make it harder for agencies to defend their guidelines in court. These changes will also create a much greater risk that the courts will make it more difficult for organizations to apply their guidelines.
Common guidelines are guidance documents— a combination of general policy statements and rules of interpretation. Unlike statutory rules, they are not legally binding. As a result, they are exempt from the time-consuming and resource-intensive review and comment process that agencies must use to issue substantive rules. In the time since the agencies issued their previous joint guidance, the courts have made major changes to how they deal with guidance documents.
In 2012 and 2016, the Supreme Court Posted two unanimous opinions which sent a clear message to circuit courts that they should be more willing to review agency decisions that are made relatively early in a decision-making process. Circuit courts have responded judging that any guidance document with significant practical effects is subject to review prior to entry into force. In 2020, the federal circuit become the last circuit court to make this major change to the judicial approach to reviewing guidance documents.
Around the same time, the Supreme Court Posted a notice in which it announced a much more demanding approach to the pre-application review of guidance documents. The tribunal tenuous that an organization cannot make a major change to a policy without providing a detailed explanation that a court deems adequate. If the prior policy created trust interests, the agency should Explain why his policy change justifies the negative effects the policy change will have on trust interests.
Because of these major developments in administrative law, there is no doubt that the courts will scrutinize the new Joint Merger Guidelines before they are enforced. Courts will not abide by the joint guidelines unless they deem the agencies’ explanation of the policy changes reflected in the guidelines adequate.
When engaging in pre-enforcement review of the Joint Guidelines, courts are likely to be far less deferential to antitrust agencies than they have in the past due to other major changes in administrative law.
In a 2019 opinion, the Supreme Court made clear that review tribunals should give agencies far less deference than they have in the past. In a 2022 opinion, the Court announcement a much stronger version of the “big questions” doctrine. If an agency relies on an old law to take an unprecedented action that has significant economic or political effects, a court cannot report to the agency or to pursue the action unless the agency can provide “clear” evidence that Congress has authorized it to take the action. If the new joint antitrust guidelines make major changes to law and policy that opponents may say are unprecedented, the guidelines may be eligible for judicial review through the major issues doctrine.
Another significant change in administrative law could have a hugely negative effect on agencies’ ability to announce and enforce the new guidelines. Since 2016, district courts and circuit courts have to become far more willing to issue nationwide preliminary injunctions that prevent federal agencies from enforcing major policy changes. The Supreme Court has decreases to stop many of these temporary injunctions, often without explaining why. These temporary injunctions can remain in effect for years and do not expire until the Supreme Court rules on the merits of the action it authorized to temporarily restrain. If the new joint guidelines make major changes to law and policy that the courts deem questionable, they will be at significant risk of a court banning agencies from enforcing the guidelines for years.
It will be interesting to see how the courts apply the newly modified doctrines of administrative law to the new joint merger guidelines.
Richard J. Pierce, Jr. is the Lyle T. Alverson Professor of Law at George Washington University School of Law.