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The latest Prompt sparked a range of opinions among our experts:
Recent news reports describe corporate structures designed to allow a company to acquire or access talent or technology, or make substantial investments, without the need for an HSR-reportable filing. Should such structures present any concern to competition enforcement?
While some experts saw potential risks in these corporate structures, others highlighted the importance of focusing enforcement efforts on more pressing competitive concerns. As the debate continues, the challenge lies in balancing vigilance with practicality in competition enforcement. See the experts’ unedited views below, in general order of concern about this practice.
The Prompt
Answering antitrust challenges one question at a time
The Chamber has assembled a range of preeminent experts in the field of antitrust from across a wide political spectrum to offer timely views on key questions of antitrust law and policy. This group brings together senior enforcers spanning seven administrations, from both the Antitrust Division at the Department of Justice and the Federal Trade Commission.
A Call for Close Scrutiny
"Yes, of course, they should. Creative alternative “acquisition” strategies that serve as end-runs around antitrust enforcement should get a very close look, especially when they involve smaller, nascent rivals and partial acquisitions that weaken incentives to compete."
A Balanced Approach
"This is worth a review. Some of these deals may lead to anti-competitive conduct much the way that contracts do for conduct cases."
Concerns with Caveats
"They present a concern to the extent the transactions themselves might be anticompetitive, so enforcers should be on the lookout for them, as the FTC appears to be doing. But unless they amount to unlawful schemes to avoid an HSR filing requirement, I don't see an immediate issue. Nor should the pre-merger reporting requirements be expanded to encompass any potentially anticompetitive arrangement. Many common types of business conduct that may at times raise antitrust concerns—exclusive supply agreements, contractual joint ventures, etc.—are not, and should not be, subject to mandatory pre-notification."
Rare but Possible Adverse Effects
"In certain instances, non-reportable investments or acquisitions of talent or technology have the potential to reduce competition. Adverse effects are rare, however, and where such transactions present a concern, the agencies have tools other than HSR to examine the effects and, if needed, to seek remedies. HSR was never intended to require reporting and prior review of all classes of transactions that might have an adverse competitive effect, and many such transactions are outside the scope of HSR—management contracts, most facilities leases, most intellectual property licenses, exclusivity arrangements, and many more. Transactions in these categories can be potentially problematic, but they are generally harmless or beneficial, and a requirement of prior notice and a waiting period is viewed as unduly burdensome on both the agencies and the public."
The Need for Empirical Evidence
"Perhaps, but it is impossible to tell without more details on the types of deals being discussed here, and without specific examples. The FTC could conduct a study to see whether transactions of these general types have harmed competition. Surely most acquihires do not harm competition, just as most mergers do not, so the practical question is whether one can identify in advance the (probably small) minority that are likely to do so."
Theoretical Concerns Without Evidence
"In theory, if there was an emerging trend of companies doing anticompetitive deals through non-reportable acquihires, that should be a concern to the agencies. But, at least right now, there’s no empirical evidence to suggest that’s happening. I also have concerns about how the agencies could require these types of deals to be reportable, without opening the floodgates to run-of-the-mill employee hirings being subject to HSR."
Resource Allocation Priorities
"I would not spend any resources on non-HSR-reportable 'corporate structures designed to allow a company to acquire or access talent or technology, or make substantial investments.' Scarce agency resources would be better expended on other investigations that have a much higher probability of identifying actual competitive problems."
A Minimal Concern
"In most cases, probably not. The HSR regime already captures far more deals than it needs, with fewer than 5% typically generating significant interest."
