Telecom, Tech Groups Blast FTC’s ‘Costly’ Merger Proposal
The FTC’s proposed merger filing changes will cost billions for combining parties and won’t benefit consumers, telecom and tech associations told the agency in comments filed by due date Wednesday. Progressive lawmakers countered that lax antitrust rules have contributed to mass consolidation and harmed consumers. The FTC and DOJ requested comments in June on proposed changes to the Hart-Scott-Rodino premerger notification process.
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The proposal requires filing substantially more information upfront for deals that don’t raise competitive issues, the associations said. CTA noted the HSR Annual Report for Fiscal Year 2021 shows the FTC and DOJ issued second requests for information for only 1.9% of reported transactions in 2022, second requests allow agencies to extend their review and seek additional information. “Requiring the remaining 98.1 percent of reported transactions to include substantially more information in their initial HSR Filings, which the Agencies would not request under the current HSR framework, makes little sense, is unnecessarily burdensome and costly, and will divert scarce resources” away from company operations, said CTA.
In the three most recently reported years, telecom companies were involved in 157 HSR filings, CTIA said, and “clearance for an investigation was granted in nine transactions, or 5.7 percent, and a second request was issued in one, or 0.6 percent,” said CA. “In other words, in over 94 percent of HSR filings involving our industry, the Agencies concluded that there were no substantive antitrust concerns that warranted any level of investigation.”
Based on agency estimates, “the average time and cost required to file will increase by nearly 300% for every filer,” said USTelecom. The agencies don’t “provide any evidence that could justify the departure. Rather, they only offer their opinion that a material number of transactions that are reported and not investigated were anticompetitive, and that the proposed changes fix those problems.” The U.S. Chamber of Commerce estimated the proposed rules will cost HSR filers an additional $2 billion annually.
The proposed changes allow agencies to better understand the competitive impacts of potential transactions within a short statutory review period, said comments from Sens. Elizabeth Warren, D-Mass., Bernie Sanders, I-Vt., and several House Democrats. The changes require upfront details about a transaction’s rationale and competitive overlaps between the transacting firms, they said. These changes are needed to respond to unprecedented increases in consolidation, they said. They noted that in the past 25 years, 75% of U.S. sectors have become more concentrated, and since 2008, U.S. companies have engaged in deals totaling more than $10 trillion. “Unchecked consolidation hurts consumers, small businesses, workers, and the economy,” they wrote. “Consolidation leads to higher prices, less innovation, and reduced quality for consumers.”
The proposed changes are in line with filing requirements in Europe, the U.K. and China, and companies have proven they’re capable of complying, said Public Knowledge in comments filed with the Writers Guild of America West. “Given the volume and magnitude of mergers, the Agencies are struggling to keep up with current statutory requirements, and these additional burdens, which should be shouldered by the filers, will help streamline agency review,” they said.
The proposed changes will help speed the process for agencies determining when an in-depth investigation is necessary, said a group of 21 state attorneys general. AGs from California, New York, Colorado and Washington, D.C. signed on. Oklahoma AG Gentner Drummond was the only Republican to sign. The AGs welcomed the proposed addition of a checkbox for filers to notify state enforcers when a deal might impact their jurisdictions. The checkbox will “facilitate early cooperation among enforcers,” they said. They also noted the proposed changes are in line with European regulations.
Imposing European-style requirements for every transaction would “improperly politicize the review process and give the antitrust agencies too much discretion to block mergers via endless delays,” said NetChoice. The Computer & Communications Industry Association said the proposed changes will “likely have a chilling effect” on U.S. merger activity, deter pro-competitive deals and stifle innovation.