Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce
October 02, 2023
Recently, the U.S. Chamber filed comments on the FTC and DOJ’s proposed merger guidelines and proposed revisions to the Hart-Scott Rodino (HSR) merger notification form. The Chamber also released the results of a survey of antitrust practitioners, including former federal enforcers. All three documents highlighted serious concerns with the FTC and DOJ’s merger proposals.
Draft Merger Guidelines
In our comments, we pointed out that the draft guidelines (1) do not reflect the current state of the law, including the agencies’ multiple recent court losses, and therefore will hold little value with the courts or business community, (2) do not reflect the current state of economic thinking and evidence, particularly the numerous recent studies and cases that recognize the pro-competitive aspects of mergers, (3) spin various structural presumptions out of whole cloth; and (4) would harm consumers and the economy by reducing capital flows and discouraging risk and innovation.
Draft HSR Form
In detailed comments, we pointed out that the proposed form would impose vast new costs on merging parties and the American economy, without any showing that the agencies are currently missing anticompetitive mergers or that they lack the tools to gather more information about mergers that merit further scrutiny. As we explain, only about two percent of reported transactions receive Second Requests for more information, and the agencies have not demonstrated that this statistic represents underenforcement. In fact, the proposed form could degrade the quality of merger review: the deluge of documents and data, coupled with open-ended and subjective requests, increase the risk that the agencies will “miss” truly anti-competitive transactions.
The Chamber also commissioned an analysis of the new HSR forms conducted by Professor Kothari of the Sloan School of Management. Professor Kothari’s analysis found that this new merger notification form will lead to substantial additional direct monetary costs for HSR filers that could total over $2 billion, with no clearly identifiable benefit. These additional costs will be borne by all filers, not just the very small fraction the Agencies identify each year for further investigation. The proposed rule will also lead to further costs to the economy beyond the direct monetary costs, including burdens on innovation and entrepreneurial activity as well as additional costs on the agencies themselves to review the new information.
The survey confirmed our concerns. Among other key findings, 87% believe that the draft guidelines do not reflect the current state of the law, 84% believe that they are somewhat or entirely divorced from economic analysis, and 96% believe they represent a politicized approach to antitrust. With respect to the proposed HSR form, 88% do not believe the current form causes the agencies to miss problematic mergers, 96% worry the new form will have an agency “bounce” a filing for being incomplete, and 98% oppose the proposed new form. Most importantly, the survey data exposes the significant inaccuracy of the government’s cost estimates, with survey respondents predicting the costs to file a single merger to be nearly five times greater than estimated.
Why it matters
Mergers and acquisitions help to direct assets to higher valued uses and contribute to a healthy and dynamic economy. Both the proposed guidelines and form, however, would severely chill merger activity by needlessly adding costs, uncertainty, and political discretion to the process. Rather than serve as a tool to identify transactions with heightened antitrust risk, the guidelines and form effectively would impose a significant regulatory tax on low-risk transactions, to the detriment of investment, innovation, and capital flows.
Moreover, the proposals also conflict with Congress’ intent that the merger review process would impose few burdens on most transactions. Congress did not want the merger review process to unreasonably impede the market for corporate control. The proposed form, however, far exceeds the FTC’s authority to adopt regulations that are necessary and appropriate to determine whether an acquisition may, if consummated, violate the antitrust laws.
The FTC and DOJ will now review our comments, and those of many others, and consider whether to revise or finalize both the draft guidelines and proposed reporting form. In our comments, we urged the agencies to withdraw or substantially revise both documents to better align with their legal authority, the economic evidence, and historical practice.
If the agencies insist on implementing these proposals without substantial revisions, we will explore all alternatives to ensure that U.S. merger policy continues to serve the best interests of consumers and our nation’s overall economic health and competitiveness