The new Trump administration’s antitrust leaders are unexpectedly maintaining the Biden administration’s enforcement priorities, including the 2023 Merger Guidelines. Eric Posner explains why this bipartisan shift is happening and what it means for corporate power and economic policy.
The Trump administration’s antitrust leaders have recently announced plans to maintain the Biden administration’s enforcement priorities, catching many observers by surprise. Andrew Ferguson, the new Federal Trade Commission (FTC) chairman, and Gail Slater, the likely incoming head of the Department of Justice’s (DOJ) Antitrust Division, have both committed to preserving the 2023 Merger Guidelines and continuing to enforce antitrust law in labor markets.
This unexpected continuity has dismayed the critics of Biden-era antitrust enforcement. These critics—economists, centrist and right-leaning legal scholars, and corporate defense attorneys—had dismissed the 2023 guidelines as reflecting economic confusion, populist impulses, or a leftist agenda. Lawyers assured their corporate clients that these guidelines would expire with the Biden administration and expressed skepticism about labor antitrust enforcement. Their clients might now wonder whether they can still trust their lawyers to give them reliable advice.
To understand the continuity from 2024 to 2025, we can start by recognizing the continuity from 2020 to 2021. The first Trump DOJ and FTC followed traditional antitrust enforcement policies in most respects, but they innovated in two ways. They brought the first serious challenges to Big Tech (including the successful case against Google that concluded last year), and brought several civil and criminal labor antitrust cases.
But it is true that the Biden administration enforcers, under the leadership of Jonathan Kanter at DOJ and Lina Khan at FTC, greatly strengthened antitrust enforcement. The 2023 guidelines both toughened the rules and broke from the enforcement philosophy embodied in the 2010 guidelines. The 2010 guidelines reflected an economic theory of antitrust law—or, more precisely, a theory of antitrust law that was heavily influenced by a group of economists who sought to align antitrust law with economic objectives. They believed that mergers were normally desirable because they enabled firms to capture economies of scale, and should be blocked only when higher prices or other specifically economic harms could be demonstrated.
The 2023 guidelines embrace a law-centered approach. Supreme Court decisions, not economic textbooks, provide the proper basis for interpreting the statutes. Mergers should be blocked if they “may” (as the Clayton Act says) reduce competition, not only when negative price effects can be reliably predicted. The new guidelines push back to an older understanding of competition when it was defined as rivalry rather than in terms of its effects. The efficiency “defense,” which was rejected by the Supreme Court half a century ago, is downgraded. Mergers between large firms are inherently suspect—partly because of their economic effects, to be sure. But also partly because Congress, motivated by broader concerns about the political influence of large corporations and their threat to traditional economic practices, adopted a policy of hostility to mergers—not just in the Clayton Act but in various amendments enacted decades later.
It would be a mistake however, to see the 2023 guidelines as a purely legalistic effort. One major impetus for them was the evidence, compiled by economists, that underenforcement of antitrust law had produced a variety of harms—higher prices, lower quality, lower wages, and market concentration. While much of the evidence remains subject to controversy, the current populist reaction owes as much to the rise of corporate power as to loss of confidence in government. Underenforcement of antitrust law is plausibly responsible for the massive political power of Big Tech and the backlash against it.
Even some supporters of the 2010 guidelines admit that they were too weak, but they fiercely defend the value of the economics embodied in them, claiming that the economic approach provided more guidance for corporations than the 2023 guidelines do. What they don’t understand is that the narrowing of the law to make it predictable inevitably invites firms to figure out ways to evade it. Recent evidence shows that firms accumulated market power while evading pre-2023 merger review simply by making serial acquisitions of small companies rather than buy their largest rival. Discretionary enforcement, based on vague statutes, is ubiquitous in the law, essential for ensuring the purpose as well as the letter of the law is respected.
All this still leaves the question why two administrations with such wildly different world views would agree on antitrust policy. We can put to rest simple ideological and partisan explanations. Today, ideologists on both sides of the divide express worries about corporate power; both political parties have a corporate and an anti-corporate wing.
The critics of the 2023 guidelines who saw it as a populist document were wrong as well. Antitrust enforcement in the Biden administration may have departed from some economic theories, but it was every bit as technocratic as the 2010 approach, relying more on legal than economic expertise.
I can think of two explanations for the bipartisan shift from the old economic theory to the modern legalist theory—one theoretical, the other political.
The theoretical explanation starts with an observation that may startle some lawyers (but not any economists): the traditional “economic” theory, as it has developed and is best articulated in the 2010 merger guidelines, is a weird hybrid monster of economics and law. It is the result of economists trying to accommodate the law, rather than of economists deriving optimal policy from economic foundations. Louis Kaplow’s recent book, Rethinking Merger Analysis, illustrates this point. Kaplow’s ideal merger policy sits more firmly on economic foundations than the 2010 guidelines did and differs significantly from them.
Among other things, the focus on consumer welfare or price effects has no basis in economics, which uses as its conventional normative baseline total (consumer plus producer) surplus, not “consumer welfare.” Even more damaging to the traditional enterprise, economists like Kaplow reject the market definition exercise central to judicial merger analysis as well as the reliance on market shares to proxy market power. Even reliance on advanced empirical techniques to predict the price effects of mergers is intensely controversial among economists, as are the merger retrospective studies that have been used to justify reform. Some people may be left with the sense that economics, practiced at the methodological level demanded by peer-reviewed journals, cannot justify, let alone formulate, any kind of rigorous merger policy, and so falls back on deference to the market to give content to law that is nothing if not skeptical of market forces. The resemblance to the backlash to deregulatory policy, which has been blamed for the financial crisis of 2008, the rise of inequality, and many other ills, is unmistakable.
The other argument is a political one. It is hardly a secret that businesses have spent a fortune to promote ideas that support lax merger enforcement. Having helped turn the agencies and the judiciary against antitrust enforcement over several decades, business groups may have decided that their marginal dollar was better spent elsewhere. That left both administrations with the freedom to appease their working class supporters by advancing antitrust enforcement.
This is not to say that economics hasn’t made its mark on merger law, and that it won’t be used again. Courts usually require economic support for market definition and damages claims. Economic theories will certainly be proposed to criticize and improve merger law, and it is possible that in the future, Congress or the Supreme Court will be influenced by them. The vagueness of the law will continue to trouble corporations and lead them to pressure enforcers to limit their focus to only the worst mergers. That kind of pressure will never go away, but at least there are indications, for the first time since the 1970s, that it is possible to push back.
Author Disclosure: Eric Posner worked on the 2023 Merger Guidelines while serving as counsel to the assistant attorney general of the Antitrust Division, Department of Justice, in 2022.
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