Democrats, centrists, comedian push for tougher merger review

2 October 2017 10:34am

By Claude R. Marx. Originally published on FTC:Watch on September 29, 2017

Antitrust law, often the policy equivalent of a wallflower, is now the belle of the political ball.

The most recent examples of the added focus on trust busting include two new bills introduced by Minnesota Senator Amy Klobuchar and a pledge by a new centrist political group to push for more aggressive policies in this area. A 15-minute monologue on added concentration in certain industries by HBO humorist John Oliver also shone a light on the subject and proved the adage that many a truth is said in jest.

One of Klobuchar's bills would amend key pieces of the Clayton Act by requiring companies that want to merge to prove to the Federal Trade Commission or Justice Department that their deal would be beneficial for competition.

Also, to block a proposed merger, the FTC or DOJ would only have to prove that the merger "materially lessens competition," which is defined as "more than a de minimis amount." This would be a change from the current standard of "significantly lessens competition."

Those provisions would apply to deals with one or more of these characteristics: The acquired business is valued at more than $5 billion; it meets the Hart-Scott-Rodino Act's size of transaction test (currently $80.8 million); and either party has assets, sales or market capitalization of more than $100 billion.

"Economic concentration is driving up costs for consumers and driving down innovation in business. We need more competition, and we need antitrust enforcement that meets the demands of the 21st century economy," Klobuchar said in a statement.

Her bill would also create an Office of Competition Advocate within the FTC to make recommendations to the agency. This new office would chiefly be responsible for making recommendations to both the FTC and DOJ and soliciting reports regarding potential anticompetitive practices.

Klobuchar is the senior Democrat on the Senate Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights. A spokesman for Subcommittee Chairman Mike Lee, a Utah Republican, didn't respond to an e-mail inquiring whether the panel will hold a hearing on Klobuchar's bills, which so far have attracted no GOP co-sponsors.

Klobuchar's other bill would revamp the filing fee structure for Hart-Scott-Rodino premerger notification filing fees and charge companies involved in smaller deals less than those seeking to make bigger deals. Also, companies that complete transactions by entering into consent orders would have to submit annual reports for five years regarding market pricing and merger-related efficiencies.

The bills are part of the Democrats' overall economic agenda, which they unveiled in July and called "A Better Deal." 

"We propose establishing new merger standards that require a broader, longer-term view and strong presumptions that market concentration can result in anticompetitive conduct," the proposal states.

"These standards will prevent not only mergers that unfairly increase prices but also those that unfairly reduce competition — they will ensure that regulators carefully scrutinize whether mergers reduce wages, cut jobs, lower product quality, limit access to services, stifle innovation, or hinder the ability of small businesses and entrepreneurs to compete."

Klobuchar's efforts could also help her political ambitions. She is being mentioned as a possible candidate for the Democratic nomination for president in 2020, and this issue could help her win over some of the party's economic populists.

Another possible candidate, Senator Elizabeth Warren, has been outspoken on the issue as well. She recently placed — and subsequently lifted — a hold on the nomination of Makan Delrahim for assistant attorney general for antitrust because she feared he would be insufficiently aggressive in going after monopolistic practices. Last year, the Massachusetts Democrat criticized the Obama administration for not blocking enough mergers.

A newly formed group advocating a centrist approach to public policy is also making trust busting one of its priorities. The New Center focuses on what it contends is the unchecked growth of certain aspects of the technology sector. Its founders are Bill Kristol, a conservative commentator and founder of The Weekly Standard, and Bill Galston, a former Clinton administration domestic policy adviser.

"Government can't be expected to sit idly by if the size and power of certain companies begin threatening the vigorous competition and innovation upon which any healthy economy depends," the organization said. "Successful market economies require new companies willing to challenge the status quo and find new answers to old problems. The New Center must clear the path."

Among its proposals are: redefining and cracking down on predatory pricing; tougher scrutiny of mergers that threaten competition; and taking seriously the anticompetitive effects of vertical integration.

Barry Lynn, one of the leading liberal voices on antitrust issues, told FTC:WATCH that the legislative and policy proposals show that "there is momentum that can't be stopped, this isn't something that people can put back in the box."

He added that the widespread media attention when the think tank New America expelled his antitrust research and advocacy program following donor pressure "somewhat surprised" him.

"We knew it would be a Washington story but the fact that it got bigger shows how much people are concerned about excessive economic concentration," he said.

Lynn's antitrust efforts are now based at the new organization that he runs, the Open Markets Institute. And while he claims New America forced his program to leave the think tank because of pressure from Google, one of its major donors, New America President Anne-Marie Slaughter said the decision was made because of Lynn's "refusal to adhere to New America's standards of openness and institutional collegiality."

While antitrust has long been the province of lawyers and wonks, it has also been featured in popular culture. Most recently, HBO's Oliver spent 15 minutes on the Sept. 24 episode of Last Week Tonight discussing the problem of excessive concentration in certain industries.

"The point is we have laws to prevent the worst effects of consolidation, and it may well be time to more aggressively use them to impose stricter standards and to empower the FTC and the DOJ's antitrust divisions," Oliver said.

He took a snarkier approach when discussing Internet search engines.

"And online search engines are of course, as we all know, dominated by one major player. That's right, say it with me, 'Bing!' That's right, Bing, 'the best way to Google something.'"

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