On February 16, the Federal Energy Regulatory Commission (FERC) issued an order that reaffirms its existing policies regarding the analysis of horizontal market power when reviewing mergers and other transactions under Section 203 of the Federal Power Act (FPA) and when assessing eligibility for market-based rate authority under FPA Section 205.1 FERC’s order terminates the proceeding it had initiated with a Notice of Inquiry in March 2011 to review the updated Horizontal Merger Guidelines issued by the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) in 2010 (2010 Horizontal Merger Guidelines).

FERC has maintained a five-step analytical framework for assessing horizontal market power in mergers and transactions under FPA Section 203 since it adopted its Merger Policy Statement in 1992. A primary focus of FERC’s merger analysis is the competitive effects of a proposed transaction, which FERC analyzes using a Competitive Analysis Screen defined in Appendix A to the Merger Policy Statement. FERC’s Appendix A Competitive Analysis Screen is based on the 1992 version of the DOJ/FTC Horizontal Merger Guidelines. The Competitive Analysis Screen entails the definition of product and geographic markets likely to be affected by the proposed transaction and the measurement of changes in market concentrations in the affected markets using defined Herfindahl-Hirschman Index (HHI) standards or other relevant statistical measures. FERC has applied its Appendix A analysis in numerous merger reviews.

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