FTC Policy: Commissioner Phillips Downplays Potential Use of Sherman Act Section 2 to Block Mergers

Commissioner Noah Phillips downplayed the Federal Trade Commission’s potential use of Section 2 of the Sherman Act to block anticompetitive mergers, highlighting its limitations compared with Clayton Act Section 7, the statute under which US antitrust enforcers typically challenge deals. For Section 2 to be effective in challenging a merger, the agency must show the acquiring company is overwhelmingly dominant.  “You need to have a monopolist,” Commissioner Phillips said. A Sherman Act Section 2 offense requires a showing that a firm possesses monopoly power in the relevant market and has engaged in exclusionary conduct to maintain its dominance. But the first prong of a Section 2 case—showing that a defendant is a monopolist in a well-defined antitrust market—is often a significant barrier for plaintiffs. Clayton Act Section 7, by contrast, doesn’t require such a showing and instead requires plaintiffs to show only that a merger may substantially lessen competition.