Proposed Legislation Seeks to Provide Companies with Consistent Merger Reviews

On September 10, 2014, the House Judiciary Committee passed legislation to eliminate certain discrepancies between merger reviews conducted by the Federal Trade Commission and Department of Justice.

The Standard Merger and Acquisition Reviews Through Equal Rules Act (SMARTER Act), H.R. 5402, introduced by Rep. Blake Farenthold (R-TX), would codify certain recommendations included in a 2007 report by the Antitrust Modernization Commission. Under existing law, the rules for reviewing a merger or acquisition differ depending on whether the FTC or the DOJ reviews the merger. The SMARTER Act would reduce differences in the merger review process.

The proposed legislation would streamline merger reviews and various other antitrust procedures that, under current law, differ between whether the DOJ or FTC is conducting the review.  The legislation would amend the Clayton Act and the Federal Trade Commission Act to provide the antitrust agencies with consistent processes when moving to block a merger.  Officials are looking to extend the same powers held by the DOJ to the FTC.  The bill also eliminates the FTC’s power to initiate an administrative proceeding to challenge a merger; that power would be preserved in other contexts, but in regards to a merger the FTC would need to file a complaint in federal district court to block a deal, the same process currently followed by the DOJ.

Specifically, H.R. 5402 would amend the Clayton Act and the Federal Trade Commission Act to provide the antitrust enforcement agencies with consistent authority and processes when seeking to prevent a proposed merger or acquisition by first extending to the FTC the same authority that DOJ presently possesses under the Clayton Act. Second, the SMARTER Act would remove the FTC’s authority to initiate an administrative proceeding challenging “a merger, acquisition, joint venture or similar transaction subject to Section 7 of the Clayton Act.” The FTC would retain the ability to initiate administrative proceedings as an enforcement tool in other contexts. However, in the context of a merger, acquisition or joint venture, the Commission’s sole enforcement avenue under the SMARTER Act would be similar to DOJ’s: filing a complaint in federal district court.

The SMARTER Act would otherwise preserve each agency’s authority to challenge monopolistic transactions or practices that would substantially lessen competition and would not affect the judicial remedies available to address them.

While the legislation is a step in the right direction, the prospects for enactment of this bill in Congress remain unlikely any time soon because the Senate Judiciary Committee is not prepared as of yet to act on similar legislation. That being said, the action taken by the House Judiciary Committee sets the stage for additional consideration going forward.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com