The 2023 Merger Guidelines, One Year On

The 2023 Merger Guidelines, when issued, were widely read as a directional document - signalling stricter agency posture across a wider range of theories - without immediate operational clarity for the deal bar. A year of practice has changed that. We now have a meaningful body of agency conduct, second-request practice, and judicial decision under the Guidelines that allows for more concrete planning.

The headline observation is that the Guidelines have not produced a step-function change in clearance rates for transactions that present no meaningful overlap. The vast majority of HSR filings still clear early termination or run the standard waiting period without further inquiry. The change is concentrated at the harder end of the spectrum: transactions that present meaningful horizontal overlap, that involve potential competition theories, or that create vertical relationships in concentrated supply chains.

The horizontal merger analysis under the Guidelines retains the structure long-time practitioners recognize, but with sharper edges. The agencies have shown a willingness to define markets more narrowly than was typical in the prior decade and to treat concentration thresholds as more presumptively determinative. The implication for deal teams is that the antitrust workstream should begin with rigorous market-definition analysis and concentration calculations under multiple plausible market definitions, not just the most defensible one.

The potential competition theory has moved from doctrinal abstraction to a real planning consideration. The agencies have brought several cases - and chilled others at the term-sheet stage - premised on the elimination of a potential entrant or a nascent competitor. The transactions most exposed are those involving large incumbents acquiring smaller targets in adjacent or expansion markets. The diligence and documentary record should anticipate this theory, and the strategic narrative should acknowledge it explicitly.

The vertical analysis is where the Guidelines differ most from prior practice. The Guidelines articulate concerns about foreclosure and raising-rivals'-costs theories that, in earlier decades, would have cleared without inquiry. The transactions most affected are those creating or strengthening vertical relationships in supply chains where the merging parties hold meaningful positions at adjacent levels. Counsel should be running explicit foreclosure-and-incentive analysis pre-signing, not waiting for the agency to raise it.

The labor monopsony theory, prominent in the Guidelines' text, has been more cited than litigated. We have seen the theory feature in a handful of agency reviews and in pre-merger negotiations, but its operational importance to deal planning remains modest. The transactions most likely to draw labor-side scrutiny are those involving large employers in concentrated geographic labor markets, particularly in healthcare, technology hubs, and certain industrial sectors.

The operational guidance for deal teams in 2025 is consistent with the trend of the last several years: invest more in antitrust analysis earlier, treat the documentary record as a persuasion exhibit, and structure deal timetables with realistic regulatory contingency. The shift from 'clear or fight' as a binary outcome to 'negotiate remedies on a defined record' as a more frequent middle path has continued. Deals that close cleanly in this environment are deals where the antitrust narrative was developed at term-sheet stage, refined through diligence, and presented to the agencies as a coherent record from the first contact.

Two procedural points are worth flagging. The expanded HSR form (now into its second year of operation) has further increased the disclosure burden, which compounds the planning value of starting the antitrust workstream early. And the second-request process under the Guidelines has, anecdotally, included broader document requests and longer interview lists than was typical in the prior decade. Counsel should be planning for second-request response work measured in months and tens of thousands of attorney-hours, not weeks.

Despite the higher friction, the deals are getting done. The market has adapted. The deals that are getting done in the 2025 environment are deals where the parties priced regulatory friction into the timetable, the deal protections, and the financial terms - and where the antitrust strategy was a workstream from the start of the deal, not the last item on the closing checklist.

What we are watching

We will return to this topic across the coming quarter. If you are actively negotiating a transaction where these issues are live, we'd welcome a confidential conversation.

Three takeaways

• The market is settling, but the diligence bar is rising.
• Preparation, not posture, is the source of speed.
• The right structure can move price more than another round of negotiation.