Washington, D.C. — The American Economic Liberties Project today applauded the U.S. Department of Justice (DOJ) Assistant Attorney General for the Antitrust Division Jonathan Kanter’s and Federal Trade Commission (FTC) Chair Lina Khan’s joint announcement launching the creation of new federal merger review guidelines.

“The FTC and DOJ’s joint effort to draft merger guidelines that faithfully uphold the law and promote fair competition is a victory for honest businesses, working people, and consumers,” said Sarah Miller, Executive Director of the American Economic Liberties Project. “The agencies’ commitment to issuing new guidelines based on market realities, including in digital and labor markets, should be applauded by anyone concerned about the power of Big Tech or the plight of working families. The judiciary should take note that the detached economic theories that have underpinned merger guidelines since the 1980s have failed on their own consumer-oriented merits, in addition to unleashing a torrent of consolidation that has undermined innovation, resiliency, and democracy. Finally, we applaud the agencies for launching a broad, open dialogue to gather input from diverse stakeholders who are impacted by merger policy, yet have historically been shut out of agency discussions.”

Merger guidelines lay out the antitrust agencies’ approach and policy toward mergers to reflect their interpretation of the law and help businesses plan. They are more than mere articulation; courts often cite the agencies’ merger guidelines as persuasive authorities on what antitrust law says.

The merger guidelines withdrawn by the Department of Justice today, and by the Federal Trade Commission in September 2021, were radically permissive. They relied on unsound economic theories and were inconsistent with the Clayton Act, a landmark piece of legislation that prohibits any merger or acquisition that “may” substantially lessen competition in any line of commerce or activity affecting commerce. By creating new merger guidelines, the FTC and DOJ are building on their efforts to restore the agencies’ ability to combat one of the biggest avenues of corporate consolidation: mergers & acquisitions.

This is urgent. As a policy quick take released by the American Economic Liberties Project last week demonstrates, mergers and acquisitions are at an all-time high, supercharging the concentration of wealth and power in America.

What You Need To Know: Mergers Are On The Rise, Harming Our Economy 

Mergers Are At An All-Time High 

Merger activity reached an all-time high of $5.8 trillion in 2021. Private equity spent more than $1 trillion on deals over the course of the year—up 110 percent compared to 2020. Banks announced a larger total deal value in mergers and acquisitions in the first half of 2021 than in all of 2020.

Mergers Drive Higher Prices 

The merger frenzy has driven price increases across America. Mergers between companies in concentrated markets result in an average price increase of 7 percent and corporate consolidation costs the average American household $5,000 a year in lost purchasing power.

Mergers Drive Lower Wages, Higher Unemployment

Years before the historic merger frenzy in 2021, the average American’s salary could have been $10,000 higher if employers were less concentrated. That concentration is only becoming more intense, and the increase in mergers has led to multiple mass layoff events with thousands of workers laid-off at a time. This concentration has reduced employment today by nearly 13 percent according to economic estimates.