October 26, 2021
Antitrust: FTC Reinstates Prior Approval Policy
Prior to 1995, the FTC had a longstanding policy requiring divestiture orders entered in merger cases to include provisions mandating that respondents seek its prior approval for future acquisitions within certain markets for a period of 10 years. In July, the FTC voted to reinstate that policy, and yesterday, the agency announced the issuance of this Prior Approval Policy Statement that sets forth the details of that policy. Here’s an excerpt:
Going forward, the Commission returns to its prior practice of including prior approval provisions in all merger divestiture orders for every relevant market where harm is alleged to occur, for a minimum of ten years. The Commission is less likely to pursue a prior approval provision against merging parties that abandon their transaction prior to certifying substantial compliance with the Second Request (or in the case of a non-HSR reportable deal, with any applicable Civil Investigative Demand or Subpoena Duces Tecum). This should signal to parties that it is more beneficial to them to abandon an anticompetitive transaction before the Commission staff has to expend significant resources investigating the matter.
In addition, from now on, in matters where the Commission issues a complaint to block a merger and the parties subsequently abandon the transaction, the agency will engage in a case-specific determination as to whether to pursue a prior approval order, focusing on the factors identified below with respect to use of broader prior approval provisions. The fact that parties may abandon a merger after litigation commences does not guarantee that the Commission will not subsequently pursue an order incorporating a prior approval provision.
The Statement goes on to address a list of factors that will be applied holistically to determine whether the FTC may decide to seek a prior approval provision that covers product and geographic markets beyond just the relevant product and geographic markets affected by the merger. It also says that the FTC will require buyers of divested assets in merger consent orders to agree to a prior approval for any future sale of those assets for a minimum of ten years.
– John Jenkins