ANTITRUST ALERT
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
ANTITRUST ALERT
A Global Resource for Compliance Officers & Legal Advisors
SMARTER Act
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Antitrust M&A Snapshot

by , and | Aug 6, 2018 | , , , , ,

United States: April – June 2018 Update

The second quarter of 2018 ushered in a trial defeat for the US Department of Justice (DOJ) and the beginning of a new era at the Federal Trade Commission (FTC). In June, Judge Richard J. Leon of the US District Court for the District of Columbia denied the DOJ’s requested injunction of the AT&T/Time Warner acquisition. The case marked the first litigated vertical challenge by the Antitrust Division in nearly 40 years. DOJ filed a notice of appeal of the district court’s decision. At the FTC, four new commissioners were sworn in in May, with a fifth to join upon the approval of current commissioner Maureen Ohlhausen to the US Court of Federal Claims. With the transition nearly complete, new FTC Chairman Joseph Simons announced plans to re-examine and modernize the FTC’s approach to competition and consumer protection laws, possibly charting a new course for FTC antitrust enforcement.

EU: April – June 2018 Update

In this quarter, we saw two significant developments concerning the issue of gun-jumping. First, the Court of Justice of the European Union (CJEU) clarified the scope of the gun-jumping prohibition, ruling that a gun-jumping act can only be regarded as the implementation of a merger if it contributes to a change in control over the target. Second, the European Commission (EC) imposed a €124.5 million fine on Altice for having breached the notification and the standstill obligations enshrined in the EUMR by gun-jumping. The EC also issued two clearance decisions following Phase II investigations in the area of information service activities and the manufacture of basic metals. (more…)



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House Passes GOP-Backed SMARTER ACT Aiming to Harmonize Merger Review Process for FTC and DOJ

by | Apr 4, 2016 | , ,

On March 23, 2016, the U.S. House of Representatives passed the Standard Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act by a vote of 235-171, despite strenuous objections from the Federal Trade Commission (FTC).  The FTC and the Department of Justice (DOJ) review proposed mergers and acquisitions.  Currently, the FTC can challenge transactions under different processes and standards than the DOJ, and those procedures provide several advantages to the FTC.  The SMARTER Act would neutralize those advantages for the FTC by: (1) eliminating the FTC’s ability to use its internal administrative proceedings to challenge unconsummated transactions; and (2) standardizing the criteria for the FTC and DOJ to obtain a preliminary injunction to block a merger in federal court.

The FTC has the authority to pursue administrative relief to challenge a transaction.  Even if the FTC is denied a preliminary injunction in federal court, the agency may continue to seek to block or unwind a transaction in an administrative trial at the FTC’s own in-house court.  That process creates two procedural advantages for the FTC.  First, the FTC can continue to challenge a transaction even after a federal district court denies an injunction.  Second, because the full trial will take place in the FTC’s court, some courts have said that the the standard the FTC uses to obtain a federal court injunction is lower than the standard the DOJ must meet.  The courts will generally grant the FTC an injunction if the case “raise[s] questions going to the merits so serious, substantial, difficult and doubtful as to make them fair ground” for a full hearing “by the FTC in the first instance and ultimately by the Court of Appeals.”  Under that standard, the FTC need not show a substantial likelihood of success at the trial on the merits or irreparable harm.

The DOJ can only challenge transactions in federal court proceedings.  The DOJ can seek a preliminary injunction under Section 15 of the Clayton Act (15 U.S.C. § 25) on the grounds that the transaction is likely to substantially lessen competition.  The DOJ is subject to a traditional equitable injunction standard including criteria such as a showing of a substantial likelihood of success and the potential for irreparable harm.

Supporters of the SMARTER Act argue that reform is necessary to ensure consistent and fair application of the antitrust laws.  SMARTER Act supporters also argue that courts apply a more lenient standard to the FTC for blocking a transaction than to the DOJ.  However, those that oppose the SMARTER Act argue that in practice, courts impose the same standards on the FTC and DOJ during injunction hearings.  Those against the SMARTER Act also argue that workload statistics compiled in the DOJ and FTC Annual Competition Reports actually demonstrate that mergers reviewed by the DOJ are more likely to be challenged or receive a Second Request than mergers reviewed by the FTC.  FTC Chairwoman Edith Ramirez expressed concern that the SMARTER Act “risks undermining the effectiveness of the FTC.”  Chairwoman Ramirez also [...]

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Top Antitrust Enforcers Respond to Congressional Questioning

by | May 26, 2015 | , , , , ,

Federal Trade Commission (FTC) Chairwoman Edith Ramirez and Assistant Attorney General William Baer testified before the House Committee on the Judiciary’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law on May 15, 2015. The oversight hearing provided an opportunity for the heads of the U.S. antitrust enforcement agencies to survey their agencies’ priorities and recent achievements. The two agency heads also faced congressional questions on a variety of topics ranging from proposed reforms to the FTC’s merger review process to the alleged unfair targeting of foreign firms by Chinese antitrust authorities.

In her prepared testimony, Chairwoman Ramirez reviewed her agency’s recent activity, emphasizing especially recent U.S. Supreme Court and appellate court victories. She reiterated the agency’s strategic focus on core areas of concern, including health care, where the agency continues to review health care provider and pharmaceutical industry mergers carefully. Ramirez also stressed the agency’s continued attention to combating efforts to stifle generic drug competition. Other key focus areas include consumer products and services, technology and energy markets.

For the U.S. Department of Justice’s (DOJ’s) Antitrust Division, Assistant Attorney General Baer’s prepared remarks focused on the division’s criminal cartel enforcement activity, including the expansive London Interbank Offered Rates  and auto parts investigations. Baer also highlighted the Division’s civil enforcement activity, noting for example that three major mergers had recently been abandoned in the face of concerns raised by the division.

Chairwoman Ramirez faced questioning from the subcommittee about its merger review process. Asked about a recent rule change, Ramirez downplayed the significance of the change and stated that it was meant merely to clarify the agency’s position in situations where a court has refused to issue a preliminary injunction. She stated that the new rule was not a departure from past practice and that the Commission always assessed each case to determine whether to continue with an administrative hearing in the wake of the denial of an injunction.

Ramirez also faced questioning about the proposed SMARTER Act. The proposed legislation, which passed out of committee in the House last fall, would require the DOJ and FTC to satisfy the same standards to obtain preliminary injunctions against mergers. Currently, for the DOJ to obtain an injunction, it must show that the transaction would cause irreparable harm if allowed to go forward. The FTC faces a different test, and must only show that the injunction is in the public interest. Under the proposed legislation, both agencies would be held to the irreparable harm standard. In addition, the legislation would prevent the FTC from using its administrative court for mergers where an injunction has been denied.  Chairwoman Ramirez contended that the proposed Act “undermines one of the central strengths of the Federal Trade Commission and one of the reasons the FTC was created in the first instance, which was to have an expert body of bipartisan commissioners rule on and develop antitrust doctrine.” She pointed also to the agency’s record of appellate success to stress her view that the [...]

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