February 23, 2018

Antitrust: FTC’s “New Sheriff” to Ramp Up Enforcement?

This Bloomberg blog says that President Trump’s choice to run the FTC – Joe Simons – may take a harder line on corporate mergers than his recent predecessors.  Here’s an excerpt:

M&A lawyers will be listening to learn just how serious Simons is about cracking down on merger proposals. If his written comments to the committee are any indication, they should be worried. He cited weak merger review – the FTC’s lack of retrospective studies and unsuccessful remedies – as the No. 1 and No. 2 problems facing the agency.

“The FTC needs to devote substantial resources to determine whether its merger enforcement is too lax,” he said. “If that’s the case, the agency needs to determine the reason for such failure and fix it.”

Simons decried the FTC’s own finding that the divestitures it imposed in 30 percent of mergers between direct competitors didn’t work. Those are deals in which the FTC ordered one or both merging parties to sell assets to a buyer that, in theory, would compete with the merged company. But the FTC found that didn’t happen in almost a third of the markets where it ordered divestitures, either because the buyer never produced a competing product or its product wasn’t able to compete as effectively as the pre-merger owner.

Simons comes from an enforcement background – he was in charge of the FTC’s competition bureau during the Bush Administration, and has been quoted as claiming that during his tenure, the FTC took more enforcement actions against anti-competitive behavior than in any comparable two-decade prior or after he was in charge.

John Jenkins