Standard Merger and Acquisition Reviews Through Equal Rules Act of 2015

Floor Speech

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Mr. GOODLATTE. Mr. Speaker, pursuant to House Resolution 653, I call up the bill (H.R. 2745) to amend the Clayton Act and the Federal Trade Commission Act to provide that the Federal Trade Commission shall exercise authority with respect to mergers only under the Clayton Act and only in the same procedural manner as the Attorney General exercises such authority, and ask for its immediate consideration.

The Clerk read the title of the bill.

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Mr. GOODLATTE. 2745, currently under consideration.

Mr. Speaker, in 1914, Congress passed the Federal Trade Commission Act, marking the beginning of a dual antitrust enforcement regime in the United States.

Because both the Department of Justice and the Federal Trade Commission enforce our Nation's antitrust laws, companies may and often do have different experiences when interacting with one agency relative to the other.

One area in which the disparity can be the most striking and troubling is in the merger review process. When a company wishes to merge with or purchase another company, it must notify both antitrust enforcement agencies of the proposed transaction.

The Department of Justice and the Federal Trade Commission then determine which agency will be responsible for reviewing the transaction. As there are no fixed rules for making this determination, it can appear that the decision is made on the basis of a flip of the coin.

There are two substantive differences that companies face based on the identity of the antitrust enforcement agency that reviews the company's proposed transaction.

The first difference arises if the agency seeks to prevent the transaction by pursuing a preliminary injunction in Federal court. A different legal standard is applied to a preliminary injunction request based solely on the identity of the requesting antitrust enforcement agency.

The second difference lies in the process available to each antitrust enforcement agency to prevent a transaction from proceeding. The FTC may pursue administrative litigation against a proposed transaction even after a court denies its preliminary injunction request. In contrast, the Department of Justice cannot pursue administrative litigation.

There is no justification for these disparities in the merger review processes and standards. The bipartisan Antitrust Modernization Commission recommended that Congress remove these disparities, and the bill before us today, the Standard Merger and Acquisition Reviews Through Equal Rules Act, or SMARTER Act, does just that.

I applaud Mr. Farenthold of Texas for introducing this important legislation that will enhance the transparency, predictability, and credibility of the antitrust merger review process.

By enacting the SMARTER Act into law, Congress will ensure that companies no longer will be subjected to fundamentally different processes and standards based on the flip of a coin.

Notably, the legislation has garnered the support of former and current FTC Commissioners, including former Chairman David Clanton, former Commissioner Josh Wright, and sitting Commissioner Maureen Ohlhausen.

The SMARTER Act is an important step toward ensuring that our Nation's antitrust laws are enforced in a manner that is fair, consistent, and predictable.

Mr. Speaker, I urge my colleagues to vote in favor of this good government bill.

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Mr. GOODLATTE. Mr. Speaker, since I have one speaker remaining, I reserve the balance of my time.

Let's look at the arguments, the straw men that have been set up by the other party claiming that this legislation does a manner of things that it simply does not do.

First, they say enacting the SMARTER Act only benefits large companies that wish to merge, but the SMARTER Act protects small and midsize companies which also come under the Federal Trade Commission's scrutiny.

This legislation is not designed to help big companies get bigger. Indeed, large companies have the resources to hire the lawyers, economists, lobbyists, and other regulatory professionals to wrestle with the FTC.

It is the small- and medium-size companies that would benefit from a fair process and an assurance that they would have their day in court.

The FTC does not always focus its attention on the large companies. In fact, a Wall Street Journal article from 2013 documents how the FTC pursued anticompetitive practices of the Music Teachers National Association, a nonprofit with about a dozen employees.

In short, this nonprofit was a collection of piano teachers. So if you think the FTC only engages with conglomerates, you are mistaken. They will even prosecute your after-school piano teacher.

The SMARTER Act ensures that, if the FTC does focus its efforts on piano teachers, on the small- and medium-size companies, they will have the benefit of a fair process.

Then they make the argument that the SMARTER Act will make it more difficult for antitrust enforcement agencies to stop a merger, but the SMARTER Act only changes the process. It does not have any substantive impact on merger reviews.

The SMARTER Act does not make any substantive changes to antitrust law. Rather, the legislation only standardizes the process between the two antitrust enforcement agencies.

The witnesses at the committee hearings on the SMARTER Act testified that the legislation only affects the process and not the substantive standard.

As Deborah Garza, former chairwoman of the Antitrust Modernization Commission stated:

No one on the AMC believed at the time, and I do not believe today, that this legislation would make it difficult or impossible for the FTC Commission to do its job. The Justice Department has done very well in pursuing its merger enforcement agenda working with the standards that apply to it. And I firmly believe that the FTC can do so as well.

Indeed, even the current Department of Justice Assistant Attorney General for the antitrust division stated:

I do not think there is a practical difference in how the courts assess the factual and legal basis for enjoining a merger challenged by the FTC on the one hand and the Department on the other.

Let me also quote from a letter written by 15 leading antitrust professors who wrote to Congress expressing their support for the SMARTER Act:

The FTC is a very impressive agency that plays a valuable role in antitrust enforcement. The SMARTER Act does nothing to undermine the FTC's authority. It simply ensures that the merger review processes and standards are equally applied to merger parties, regardless of which agency reviews the transaction.

The gentleman from New Jersey complained about what was going on with the review of proposed mergers by health insurance companies. Guess what. Who is doing those reviews? Not the FTC. The Department of Justice. It doesn't make any sense.

What does make sense is that there are lots of companies going through lots of things caused, in part, by ObamaCare forcing healthcare providers, insurance companies, and others to look at mergers and acquisitions. When they do so, the public should have the right to know that justice is being done.

This is not about big business or small business. This is about making sure that the laws are fairly and equally applied. When that happens, we should have this legislation at hand so that we have the assurance that we are going to have justice done. The FTC should operate by the same merger review processes and standards that the Department of Justice does.

I believe in the vigorous prosecution of antitrust practices and transactions by the Department of Justice and the FTC. I would not support the SMARTER Act if I thought that it would disadvantage our antitrust enforcement agencies.

The Congressional Record demonstrates that the SMARTER Act only makes the process more fair and predictable while providing the antitrust enforcement agencies with the same powers to prosecute antitrust practices.

The SMARTER Act is a commonsense process reform that ensures fairness and parity in the narrow field of merger reviews. The bill was recommended to Congress by a bipartisan commission and is supported by former top Department of Justice antitrust enforcement officials and past and present FTC Commissioners of both political parties.

This legislation will help America continue to serve as a leader and innovator in competition law, and I urge my colleagues to vote in favor of this bill.

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Mr. GOODLATTE. Mr. Speaker, I claim the time in opposition to the motion to recommit.

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Mr. GOODLATTE. Mr. Speaker, there is no question that, because of ObamaCare and government regulation, the cost of prescription drugs is going up--and going up too fast. We definitely need to reform our healthcare system, starting with repealing ObamaCare and putting in place real patient-centered reforms to our healthcare system, but that is not what this legislation is about today.

The SMARTER Act is predicated on a very simple notion: the results of an antitrust merger review should not be dependent on which antitrust enforcement agency happens to review the deal. The outcome should not be determined by the flip of an agency coin. The SMARTER Act is a process reform that ensures that all parties have their day in court and are subject to the same standards, regardless of which antitrust enforcement agency reviews their merger.

The motion to recommit defeats this simple reform by carving out an exception for one area. Why, if we are seeking justice, why, if we are seeking a fair standard for all people before these antitrust review agencies, would we take this particular area and say, no, we are not going to have a consistent standard for reviewing something that the gentleman feels is so important.

We all feel that is very important, and that is why we all should oppose this motion to recommit and vote for the underlying bill. I urge my colleagues to vote against the motion.

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