FTC To Alter Merger Enforcement Policies

New Approach Will Streamline Process, Enhance Effectiveness

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The Federal Trade Commission is streamlining the merger enforcement process to enhance the effectiveness of provisions designed to restore competition, according to William J. Baer, Director of the FTC’s Bureau of Competition. Speaking at the Annual Meeting of the American Bar Association, in Washington, D.C., in a speech detailing the Bureau of Competition’s accomplishments over the last year, Baer said that an initial review of the effectiveness of divestiture orders in merger cases tends to “confirm that we need to change the Bureau’s policy toward the remedies we seek in merger settlements.”

Baer said that future FTC merger cases will include shorter time limits for divestitures, expanded packages of assets to be divested, increased use of incentives for on-time divestitures and incentives for expediting the transfer of assets. Baer also noted that, “Where problematic transactions often used to be challenged in their entirety, today most are resolved by consent decree where the deal is allowed to close so long as a package of assets sufficiently large to address our competitive concern is set aside for divestiture.”

Baer laid out the changes to be implemented in future FTC merger enforcement:

  • shorten the time a respondent has to divest the asset package from 15 months to 6 months, and if companies cannot meet that target date, a Commission-appointed trustee may dispose of the assets for them;
  • expand the asset package to be divested when doing so could make successful divestiture more likely;
  • emphasize to respondents the advantages of identifying a buyer up front; Baer said, “Where a respondent confidently asserts that a more limited divestiture package will both resolve our competitive concerns and be saleable, it can put its money where its mouth is by bringing us the buyer to evaluate in conjunction with the Commission’s initial consideration of the settlement.”
  • include “crown jewel” provisions which allow the Commission to divest a more complete package of assets in a situation where respondents have been unable to divest a more modest package of assets.

“We will emphasize...the importance of...Hold Separate Agreements comprehensive enough to protect all the assets to be divested,” to assure that assets are well preserved, Baer said.

Finally, Baer said that the Commission would move swiftly to appoint trustees where divestiture timetables are about to expire and would routinely follow up with buyers of divested assets to “improve our understanding of the features that lead to success and failure of divestiture orders.”

Baer said that taken together, the new policies would enhance efficiency and strengthen merger enforcement. “The public is well served by divestitures that are accomplished quickly, require limited Commission resources and have a higher likelihood of success,” he said.

Baer’s remarks reflect his own views and not necessarily those of the Commission or any Commissioner.

Copies of the remarks are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov