House Judiciary Sends FTC Reform Act to House Floor Despite Protests From Democrats, FTC
The House Judiciary Committee passed the Standard Merger and Acquisition Reviews Through Equal Rules (Smarter) Act (HR-2745), to the House floor on a 18-10 vote during a markup of the bill Wednesday, despite protests from Democrats and FTC Chairwoman Edith Ramirez. The Smarter Act would eliminate the existing disparities between the two antitrust enforcement agencies -- the FTC and Justice Department -- and ensure that companies face the same standards and processes regardless of which federal agency reviews a merger. The Smarter Act was introduced in June by Antitrust Law Subcommittee Vice-Chairman Blake Farenthold, R-Texas, and co-sponsored by Antitrust Law Subcommittee Chairman Tom Marino, R-Pa., and House Judiciary Committee Chairman Bob Goodlatte, R-Va.
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“There are two potential differences that companies can face based on the identity of the antitrust enforcement agency that reviews the companies’ proposed transaction,” Goodlatte said. The first is the varied legal standards that apply when either the FTC or DOJ pursues a preliminary injunction in federal court, because there's a “disparate legal standard applied to each,” he said. “The second potential difference lies in the process available to each antitrust enforcement agency to prevent a transaction from proceeding,” he said. “The FTC may pursue administrative litigation against a proposed transaction, even after a court denies its preliminary injunction request,” Goodlatte said. There is no justification for the disparities, he said, adding that former FTC Commissioner Josh Wright supported the Smarter Act, as does current Commissioner Maureen Ohlhausen.
Ranking member John Conyers, D-Mich., said he was concerned the Smarter Act would weaken the FTC’s independence, saying that when the agency was created in 1914, Congress established it as an independent agency. Even though DOJ’s antitrust authority existed when the FTC was created, Congress established the commission in direct response to the perceived inadequacy of existing mechanisms and corporate abuses that continued to exist, Conyers said. The Smarter Act weakens FTC authority, Conyers said. He said former Commissioner Bill Kovacic called the bill “rubbish,” and Ramirez said the bill has “far reaching effects” that would significantly alter the nature of the FTC.
Marino said the bill was necessary so companies would know how antitrust agencies would review mergers. Rep. Hank Johnson, D-Ga., said it’s unclear if the agencies differing approaches has led to different outcomes and said he was hesitant to make wholesale changes to FTC authority when the harms are merely speculative. Johnson proposed that instead of raising the burden of proof the FTC must show in a case, DOJ’s burden of proof should be lowered.
Rep. Sheila Jackson Lee, D-Texas, said the bill doesn’t consider how stripping the FTC of antitrust authority would impact consumers. She introduced an amendment that would eliminate the bill, but later withdrew it.
Farenthold reminded the committee the bill was created based on recommendations made by the Antitrust Modernization Commission in a 2007 report. That report was cited by Republican Sens. Mike Lee, Utah, Chuck Grassley, Iowa, and Orrin Hatch, Utah, Wednesday when they introduced the Senate’s version of Farenthold’s Smarter Act. The Senate Judiciary Committee scheduled a hearing on the bill Oct. 7 at 10 a.m. in 226 Dirksen.