The Antitrust Awakening: How the DOJ is Quietly Rewriting the Rules of Corporate M&A

When the lawyers stop talking at a deal table, a certain silence descends. People who used to ignore antitrust are now leaning forward in their chairs in the glass towers along Pennsylvania Avenue and the corner offices of midtown Manhattan. You can almost hear it there. Late in 2023, something changed, and corporate America is still figuring out how much.

The joint 2023 Merger Guidelines, published in December by the Justice Department and the Federal Trade Commission, appear to be a procedural document on paper. In reality, it’s more akin to a map redrawing. The FTC Chair, Lina Khan, has been forthright about her goals since coming to Washington with a list of grievances against monopoly power and a Yale law review article. Jonathan Kanter at the DOJ has also done so. Together, they have adopted the stance that enforcing mergers for forty years was essentially a long nap.

The figures themselves provide a brief narrative. A merger was presumed to be illegal under the previous 2010 guidelines only if market concentration exceeded an HHI of 2,500 with a jump of 200. With a mere 100 increase, the new threshold is 1,800. That sounds technical, the kind of information that would be buried in a Bloomberg article’s footnote. However, it isn’t. A transaction between two businesses with 29% and 2% of a market, which appeared to be perfectly legal under the previous framework, is now risky. Speaking with antitrust attorneys in Washington, I get the impression that they have spent the last few months elucidating this precise fact to clients who are skeptical.

It’s not just the math that makes this moment unique. It’s the underlying philosophy. The agencies are expanding the definition of harm itself rather than merely lowering thresholds. Workers, suppliers, startups, small competitors, and other groups that were previously on the periphery of antitrust thought are now central, at least in the guidelines’ language.

A section is dedicated to roll-up acquisitions, which are the preferred approach of private equity firms and consolidating health systems. Early in December, the White House released a fact sheet cautioning that these repeated purchases could harm taxpayers and patients in ways that no single transaction appears to be severe enough to cause.

Many critics contend that this is a step backward. They cite out-of-date case law, economic circumstances that don’t fit the framework, and a nostalgia for the trustbusting era that doesn’t translate well to a world of digital marketplaces and cloud platforms. That argument has merit. There is also merit to the counterargument, which holds that the agencies grew weary of seeing deals close while the damages accumulated later and that the previous framework simply stopped catching things.

Observing this unfold, it’s amazing how much work needs to be done before a deal can be reached in court. The guidelines are not legally binding in and of themselves. Although they are cited by courts, they are not required to abide by them. Uncertainty is the true leverage. A general counsel who once approved a deal over coffee is now calling outside counsel, setting up three meetings, and reassessing risk. Nowadays, some deals are dying in the boardroom; they are never reviewed, never announced, or just given up because the math isn’t working.

The courts may take a strong stance. In the same way that the 2020 vertical guidelines were withdrawn in 2021, it’s possible that a future administration will quietly undo all of this. However, the deterrent effect already exists, which could be the reason. The loudest enforcement action is frequently the one that doesn’t need to occur, and Khan and Kanter appear to understand something that the old guard occasionally overlooked.