Following the public comment period on the FTC and DOJ’s proposed merger guidelines, leading antitrust experts and economists expressed significant concerns about the dramatic shift in competition policy that the proposal represents. In a recent panel discussion hosted by AEI, panelists zeroed in on the gaps in the proposed guidelines and the broad impact that they would have on consumers, underscoring the importance of a balanced approach to merger enforcement. A compilation of highlights from the discussion is included below:
1. Mergers and acquisitions (M&A) are associated with greater R&D and increased innovation.
“We found a strong relationship between mergers and R&D, and mergers and patents.”
– Dr. Robert Kulick, Economic Consultant, NERA Economic Consulting
2. The agencies’ proposal is grounded in political animosity toward mergers and is largely unsupported by existing antitrust laws.
“These guidelines are an attempt at revolution. [The agencies] claim… mostly with cases from long ago that the law supports this approach. That claim is false.”
– Timothy Muris, Visiting Senior Fellow, AEI
3. The proposed guidelines would broadly deter M&A, including activity that is recognized as pro-competitive under existing competition policy.
“There has been, I would say, a sustained effort under the Biden administration to deter more mergers.”
– Carl Shapiro, Professor, University of California, Berkeley Haas School of Business
4. The proposed guidelines represent a drastic shift in U.S. competition policy, inviting an uncertain environment for innovators that harms consumers and businesses.
“We may see greater swings in policy over time, and one of the things the agencies may want to consider is the degree to which they want to invite that swing.”
– Noah J. Phillips, Partner, Cravath, Swaine, & Moore LLP
These proposals would have a direct impact on M&A within the life sciences ecosystem. It takes an average of 10-15 years and costs more than $2.6 billion for a life sciences company to bring a breakthrough medicine to market. On top of the many anticipated “failures” of R&D and the complex regulatory landscape faced by life sciences innovators, these costs are enough to stall the development of more than 90% of promising new therapies before they even leave the lab. M&A is critical to allowing life sciences companies of all sizes to secure the resources and expertise they need to navigate these challenges and deliver new treatments and cures to patients.
For decades, balanced competition policy that recognizes the importance of life sciences M&A has helped to establish the U.S. as a global leader in innovation. Amid an increasingly competitive global economy – and as thousands of patients already can’t afford to wait for a treatment or cure – now is not the time for our regulators to change course.