FTC and DOJ Release 2023 Merger Guidelines Rejecting Consumer Welfare Standard

The Federal Trade Commission and Department of Justice released final 2023 Merger Guidelines on December 18, 2023, representing a major departure from the consumer welfare standard that had guided antitrust enforcement for nearly half a century. The Guidelines signaled a move from the existing consumer welfare standard—which evaluates business practices based on impact on consumer prices—toward a more structural approach emphasizing market shares and concentration levels, similar to guidelines from before the 1980s Reagan revolution. The process began on January 18, 2022, when FTC Chair Lina Khan and DOJ Assistant Attorney General Jonathan Kanter published a Request for Information on Merger Enforcement, following Biden’s July 2021 Executive Order calling for revised guidelines. The 2023 Guidelines were intended to address ‘modern market realities,’ including competition for labor, serial acquisitions, and competition within and among digital platforms. However, the Guidelines proved controversial and were adopted before any Republican commissioners had joined the FTC. The shift away from consumer welfare toward deconcentration diverged from how courts have construed antitrust law, with the Supreme Court characterizing the Sherman Act as a ‘consumer welfare prescription.’ This tension between the Guidelines and judicial precedent would prove critical as courts continued to reject FTC and DOJ challenges to major mergers. FTC Commissioner Melissa Holyoak indicated Republicans would seek to rescind or revise the Guidelines, and the Trump administration’s 2025 return made their survival uncertain.