SMARTER Anti-Trust Enforcement

May 18, 2018

Ask any child and they will admit they have a preference for which parent to ask for permission. One parent may be typically more lenient with enforcing bedtime while the other might be more lax with curfew enforcement or what shows the child is allowed to watch or eat for dinner.

While this can be an endearing quirk of parenting, a similar unequal application of the law by government agencies is a recipe for chaos.

Unfortunately the federal agencies charged with enforcing our nation’s anti-trust laws have developed just such a dysfunctional habit. Both the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice are tasked with enforcing Section 7 of the Clayton Act, the prevailing antitrust law which prohibits mergers or acquisitions that would “substantially lessen competition’ or “tend to create a monopoly.”

So whenever two or more private companies attempt to complete a merger or acquisition, they must notify the FTC and the Antitrust Division. The agencies will then decide between themselves who will scrutinize the merger for section 7 violations, and then the agency in charge will have a period of time to analyze the transaction.

If it is determined that some part of the transaction would violate section 7, the agency will seen an injunction in federal court. If the injunction is granted, the parties involved in the proposed transaction often abandon the merger; if the injunction is denied, the parties move forward with the transaction.

Unfortunately, however the two agencies – the FTC and the Antitrust Division of the DOJ – are held to different standards when seeking a preliminary injunction. The FTC has a special statue that allows them to have an injunction granted with a lower burden of proof than the standard to which the courts hold the DOJ.

Additionally, if the FTC loses a preliminary injunction in federal court, it has the power to litigate its case in an administrative proceeding. The DOJ does not have that option.

This means that the same law is being applied differently depending on which agency is in charge.

And that disparity is why the Antitrust Modernization Commission recommended that Congress standardize the agencies procedures. As a result, I, along with Sens. Hatch (R-Utah), Tillis (R-NC), and Chairman Grassley (R-IA) introduced the Standard Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act. This bill requires that the FTC go through the same procedures that the DOJ goes through when enforcing antitrust law.

Additionally, the bill would direct the Federal Communications Commission, which is required to decide on certain communications-related mergers, to follow their own 180-day decision window. This FCC fix would help eliminate uncertainty and ensure that parties receive a timely decision on their merger.

Just as good parents put rules in place and strive to enforce those rules uniformly, it is important to ensure agencies in charge of executing the same law do so in a uniform way. The SMARTER Act is a step towards achieving this.