House Committee Votes to Narrow FTC Merger Enforcement

Stay current on the latest developments from agencies including the CFPB, Federal Reserve, FDIC, and OCC to advise clients on real-life regulatory situations.

By Alexei Alexis

The House Judiciary Committee April 5 approved legislation that would curtail the Federal Trade Commission’s ability to challenge mergers.

Proponents say the legislation would provide greater certainty to the merger review process by harmonizing conflicting approaches at the FTC and the Department of Justice. Critics argue that it would unnecessarily weaken the FTC by taking away a useful enforcement tool.

The House is slated to recess April 7 and return for a spring break on April 25. “We hope that it’ll reach the floor during the next work period,” a spokeswoman for bill sponsor Blake Farenthold (R-Texas) told Bloomberg BNA.

Sen. Mike Lee (R-Utah), chairman of the Senate Judiciary Committee’s antitrust subcommittee, plans to introduce a companion bill, a spokesman told Bloomberg BNA.

Under the Republican bill, H.R. 659, the FTC would no longer be able to subject proposed mergers to administrative litigation. Currently, in addition to going to court to challenge a merger, the FTC may use an internal process through which cases are heard and decided by an administrative law judge.

If the bill is enacted, the FTC, like DOJ, would be limited to seeking a court injunction if it wants to stop a transaction.

“There is no justification for these disparities in the merger review processes and standards,” House Judiciary Committee Chairman Robert Goodlatte (R-Va.) said at the committee vote on the bill. “Such disparities lead to unnecessary uncertainty based on which agency is reviewing the transaction.”

Party-Line Vote

The bill was approved 16-10, along straight party lines with Democrats opposing it.

“H.R. 659, by weakening the commission’s independence, undermines Congress’s original intent in creating the Federal Trade Commission in the first place,” said Rep. John Conyers (D-Mich.), the committee’s top Democrat. “For good reasons that are still relevant today, Congress established the commission to be an independent administrative agency.”

Similar legislation passed the House in the last Congress but stalled in the Senate. The Obama administration had raised concerns about the measure.

Two major deals are awaiting agency review at the FTC -- Walgreens Boots Alliance Inc.’s planned acquisition of rival Rite Aid Corp. and Sherwin-Williams Co.’s agreement to buy Valspar Corp. The bill could impact how the commission proceeds in these cases.

Flip of Coin

While both the FTC and DOJ are charged with enforcing U.S. antitrust law, there are no rules governing which agency will be chosen to review a merger. The decision can appear random, as if decided by the flip of a coin, Goodlatte said.

Proponents say the bill is aimed at ensuring that companies face the same standards and processes regardless of which federal agency reviews a merger.

“This legislation is long overdue,” Neil Bradley, senior vice and chief policy officer at the U.S. Chamber of Commerce, said in an April 4 letter to the committee. “As a matter of basic fairness, a proposed merger undergoing antitrust review should be subject to the same government review process regardless of whether the review is conducted by the Department of Justice (DOJ) or the Federal Trade Commission (FTC).”

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Antitrust on Bloomberg Law