Hearing of the House Judiciary Committee - Markup of H.R. 5402, the "Standard Merger and Acquisition Reviews Through Equal Rules Act of 2014" (SMARTER Act)

Hearing

Chairman Goodlatte: This year marks the 100th anniversary of the inception of the Federal Trade Commission (FTC) and the formation of a dual antitrust enforcement regime in the United States.

Because both the Department of Justice (DOJ) and the FTC 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 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. DOJ and the FTC 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 a coin."

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

The first potential difference arises if the agency seeks to prevent the transaction by pursuing a preliminary injunction in federal court. There is a disparate legal standard applied to each antitrust enforcement agency when it requests a preliminary injunction.

The second potential 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, DOJ cannot pursue administration litigation.

There is no justification for these disparities in the merger review processes and standards. The bipartisan Antitrust Modernization Commission recommended that Congress remove the disparities, and the bill before us today, the "Standard Merger and Acquisition Reviews Through Equal Rules Act of 2014," or the "SMARTER Act," does just that. I applaud Mr. Farenthold 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 assure that companies no longer will be subjected to fundamentally different processes and standards based on the flip of a coin. The SMARTER Act is an important step toward achieving this Committee's goal of assuring that our nation's antitrust laws are enforced in a manner that is fair, consistent and predictable.

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