New merger guidelines proposed by the Federal Trade Commission and the Department of Justice are meant to consider the intricacies of the modern economy, such mergers that are part of a series of multiple acquisitions or mergers that involve multiple platforms.

“With these draft merger guidelines, we are updating our enforcement manual to reflect the realities of how firms do business in the modern economy,” FTC Chair Lina M. Khan said in a statement. 

The updated guidelines come as long-term care is seeing record-level merger and acquisitions activity. 

“The reality is, to be successful long-term in this sector, you need scale. The operating complexity of senior living and care is only escalating, and scale, particularly concentrated scale in certain markets, helps with sustainability,” Lisa McCracken, director of senior living research and development at specialty investment bank Ziegler, told the McKnight’s Business Daily. 

Under antitrust laws passed by Congress, the FTC and the DOJ are tasked with preventing mergers that may substantially lessen competition or tend to create a monopoly in an industry. The agencies launched a joint public inquiry in early 2022 aimed at modernizing federal merger guidelines to better prevent illegal, anticompetitive deals.

“The majority of mergers, acquisitions, affiliations in our space are not necessarily of the magnitude where we need to have great concerns about a monopoly or lack of competition. I think we have a long way to go before we reach a threshold whereby that is a major concern,” McCracken said. “Having said that, there are indeed some organizations with substantial size whereby a merger could garner attention, but I think those situations will be in the minority.” 

The draft merger guidelines provide an overview of 13 principles that the agencies may use when determining whether a merger is unlawfully anticompetitive under the antitrust laws. Mergers, according to the principles, should not significantly increase concentration in highly concentrated markets, eliminate substantial competition between firms, increase the risk of coordination, eliminate a potential entrant in a concentrated market, substantially lessen competition by creating a firm that controls products or services that its rivals may use to compete, entrench or extend a dominant position or further a trend toward concentration.

Additionally, according to the principles:

  • Vertical mergers should not create market structures that foreclose competition. 
  • 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 effect on competition.
  • Mergers should not otherwise substantially lessen competition or tend to create a monopoly.

“Informed by thousands of public comments — spanning healthcare workers, farmers, patient advocates, musicians and entrepreneurs — these guidelines contain critical updates while ensuring fidelity to the mandate Congress has given us and the legal precedent on the books,” the FTC’s Khan said.

The public is invited to further comment on the draft guidelines before Sept. 18. The agencies will use the comments to evaluate and update the draft before finalizing the guidelines.