The Federal Trade Commission and Department of Justice have drafted new merger guidelines outlining how the agencies should approach corporate consolidations.
Here are the key points:
- Mergers should not significantly increase concentration in highly concentrated markets.
- Mergers should not eliminate substantial competition between firms.
- Mergers should not increase the risk of coordination.
- Mergers should not eliminate a potential entrant in a concentrated market.
- Mergers should not substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete.
- Vertical mergers should not create market structures that foreclose competition.
- Mergers should not entrench or extend a dominant position.
- Mergers should not further a trend toward concentration.
- When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series.
- When a merger involves a multi-sided platform, the agencies examine competition between platforms, on a platform, or to displace a platform.
- When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers.
- When an acquisition involves partial ownership or minority interests, the agencies examine its impact on competition.
- Mergers should not otherwise substantially lessen competition or tend to create a monopoly.
These are good principles! Notably, they’re not obsessed with whether a merger is likely to raise prices for consumers. Rather, they look more broadly at how consolidation impacts all the components of an industry.
The FTC has invited public comment on these draft guidelines. As of today, there are over 1,000 comments. The WGA has encouraged its members to share their experiences. Citizens working in every industry should write in as well. Mergers affect all of us, and these policies could shape the next few decades.
I submitted my comment today. Here’s what I wrote.
I’m a screenwriter and novelist who has seen firsthand the impact of mergers and consolidation in the film and publishing industries. That’s why I’m writing in support of the FTC and DOJ’s Draft Merger Guidelines. We need to revive and rethink antitrust enforcement in this country so that it recognizes consolidation’s impact on workers, sellers, consumers and citizens.
My work as a screenwriter has found me working for both Disney (including 2019’s Aladdin) and what remains of Fox (where I currently have a series in development). I believe Disney should never have been allowed to buy 21st Century Fox in 2019. Not only did it increase concentration and reduce competition for consumers, it did the same for writers. This issue is addressed in Point 11 of your draft guidelines: “When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers or other sellers.”
When Disney bought Fox, it came at the immediate cost of redundant employees’ jobs. It then created downward pressure on the wages throughout the industry, with one less buyer for the services of writers, directors, actors and crew.
I can offer a specific example from my own experience. In 2018, Fox brought me in to meet on a high-profile book adaption for their Fox Family division. By the time it came to make my writing deal, the proposed Disney merger was announced and the division wasn’t allowed to pursue any project that might compete with Disney’s own. All of the executives on the project were let go.
In the process of Hollywood development, projects disappear and executives get fired all the time. What was unique is how this merger broke so many pieces simultaneously, from studio feature films to indies to cable to broadcast television. We should consider not just the immediate negative impact, but also the after effects. Tom Rothman, who used to run Fox’s film division, noted that “Consolidation under giant corporate mandates rarely promotes creative risk-taking. And in the long run, it is always a challenge to compete against horizontal monopolistic power.”
I also work as an author, with three books published by Macmillan and an upcoming book published by Crown (Penguin Random House). Consolidation in the industry means that 60% of books published in English come from just five publishers, and we nearly dropped to four. They have unprecedented control over the market, limiting options for retailers, authors and readers.
I’m a proud member of the Writers Guild of America, West, and have served on both its board and negotiating committee. The entertainment industry’s history of unchecked consolidation is a major factor in the strike of 11,500 writers including myself on May 2 against our employers, who collectively negotiate our three year contract as the Alliance of Motion Picture and Television Producers (AMPTP). SAG-AFTRA has joined us on strike, their 170,000 members seeking a contract that fairly compensates us for the value we create.
It is essential that antitrust agencies consider how any future proposed mergers in this industry — such as the long-rumored Apple/Disney deal — would impact writers and other industry workers. It’s not enough to wait and see; antitrust agencies should proactively investigate and announce decisions, so CEOs don’t propose deals that paralyze the industry.
These Draft Merger Guidelines are the solid principles we need to maintain a vibrant, competitive environment that serves all Americans.
Thank you for the consideration of my comments.
You can submit your own comment on the FTC’s public comment page.
I wanted to thank you for not only graciously listening to me ramble last night, but asking me how things were going. As you could probably assume from what I said, it’s been a lot of ups and downs.