20230927 U S Chamber HSR Comments and Kothari Report
September 27, 2023
FTC Chair Lina Khan was recently asked about the benefits of allowing the free movement of capital through mergers and acquisitions and a “perception” that the FTC has become overtly hostile to merger activity. She responded:
"Just to put things in context, any given year the antitrust agencies get anywhere between 1,500 and 3,000 merger filings. Of that number, 98 percent go through without even second questions being asked by the agencies so around two percent of all deals even get what’s known as a Second Request, which is, you know, a set of questions so that we can do a deeper investigation. And an even smaller fraction ultimately results in a legal challenge—so vast majority of deals still going through ... Again, 98 percent of deals [are] going through without even a second question. It’s really an issue on the margins..."
We agree with Chair Khan’s assessment that antitrust concerns are raised at the thin margin of M&A activity Yet, notwithstanding this fact that only a small fraction of reportable transactions raise competition concerns, through its Notice of Proposed Rulemaking (“NPRM”) the FTC is proposing a “comprehensive redesign of the premerger notification process” that would impose alarming new costs and burdens on all reportable transactions including the 98 percent of deals Chair Khan has conceded do not merit “even a second question" by staff at the FTC and the Department of Justice's Antitrust Division (“DOJ”) (collectively “the Agencies”).
The Chamber and its members have significant concerns regarding the unjustified new burdens these proposed changes would impose on the vast number of transactions that fail to raise even a specter of anticompetitive harm. In response to the NPRM, the Chamber engaged Professor Kothari to analyze the burdens the proposed changes would impose on filing parties. That analysis is attached to these comments. In evaluating the burden, he considered a recent survey conducted by the Chamber of antitrust practitioners regarding the NPRM’s proposed changes, as well as the revised merger guidelines recently proposed by the Agencies. Those survey responses overwhelmingly indicate that the FTC has vastly underestimated the burdens associated with the NPRM.
While some specific changes may be reasonably calibrated to achieve the federal antitrust agencies’ legitimate enforcement objectives, overall, this radically re-imagined HSR regime represents an unwarranted transformation of the current HSR notification framework.