House Passes Bill to Trim FTC Merger Powers (1)

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By Alexei Alexis

The House May 9 passed Republican legislation to trim the Federal Trade Commission’s merger enforcement powers, as a new Republican majority assumes control of the agency.

The bill passed 230-185 over objections from Democrats. It would end the FTC’s ability to challenge mergers through administrative litigation. The FTC, like the Justice Department, would be limited to seeking a court injunction if it wants to stop a transaction.

Currently, in addition to going to court to challenge a merger, the FTC can use an internal process through which cases are heard and decided by an administrative law judge.

Similar legislation passed the House in the last Congress but stalled in the Senate. Sen. Mike Lee (R-Utah), chairman of the Senate Judiciary Committee’s antitrust subcommittee, plans to introduce a companion bill as soon as the week of May 14, a spokesman told Bloomberg Law.

The Obama administration raised concerns about the measure, but this time, the bill (H.R. 5645) is heading to the Senate without FTC or White House objections hanging over it.

“I think the act has a better chance than ever of passing,” Michael Knight, a partner at the law firm Jones Day, told Bloomberg Law. “Some of the opposition, including from those within the FTC, appears to have faded or moved on.”

Joe Simons, the FTC’s new chairman, hasn’t issued an official position on the bill, FTC spokeswoman Betsy Lordan told Bloomberg Law.

The commission recently returned to full strength, with a 3-2 Republican advantage. Simons and three other new commissioners were sworn in the week of April 30. The other new FTC commissioners are Noah Phillips (R), Rohit Chopra (D), and Rebecca Kelly Slaughter (D). The fifth Trump pick, Christine Wilson (R), will take office when sitting Republican commissioner Maureen Ohlhausen leaves the agency.

New Chairman Agrees

Simons said during his confirmation hearing in February that he doesn’t see the point in having different standards for each agency. “In terms of where the FTC files its merger challenges, I think generally it should be in the federal court,” he said in an exchange with Lee, adding that the FTC only needs “one bite at the apple.”

Proponents of the bill, including the U.S. Chamber of Commerce, say it would provide greater certainty to the merger review process by harmonizing conflicting approaches at the FTC and the DOJ. “There is no justification for these disparities in the merger review processes and standards,” House Judiciary Committee Chairman Robert Goodlatte (R-Va.) said on the House floor.

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.

Critics say the bill would unnecessarily weaken the FTC by taking away a useful enforcement tool.

“This bill goes in exactly the wrong direction,” Rep. Jerrold Nadler (D-N.Y.), the Judiciary Committee’s top Democrat, said in floor remarks.

The measure “is an attack on the FTC’s ability to vigorously promote competition by eliminating the use administrative litigation in merger enforcement, an important component of the commission’s structure,” Rep. David Cicilline (D-R.I.), ranking member on the House Judiciary Committee’s antitrust subcommittee, said in a statement before the House vote.

The House Judiciary Committee approved the legislation last year along straight party lines.

The chamber says the bill would help ensure that companies face the same standards and processes regardless of which federal agency reviews a merger. “Merging parties should not be subject two different processes that have the potential to generate different outcomes,” Neil Bradley, executive vice president and chief policy officer at the chamber, said in a May 8 letter to House members endorsing the legislation.

The House also approved technical changes to the measure at the request of the FTC, including language clarifying that the agency retains independent litigating authority in merger cases brought under the Clayton Act and that it has the authority to seek documents from outside parties in a variety of contexts, including merger reviews.

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

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

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