Remedy Study

The FTC is studying the effectiveness of the Commission’s orders in merger cases where it required a divestiture or other remedy.  The study will update and expand on the divestiture study the FTC issued in 1999.  The new study, which was cleared by the Office of Management and Budget on August 12, 2015, will focus on 90 merger orders issued by the Commission between 2006 and 2012.

For certain orders, the FTC will use a case study method similar to that used in the earlier study, interviewing buyers of divested assets as well as significant competitors in each market, including the merged company, and customers.

As discussed in the Federal Register Notice associated with this project, interviews of the buyer of divested assets will likely cover these topics:

  • Whether the increased use of buyers-up-front hindered the buyer’s ability to conduct adequate due diligence.
  • Whether shortening the divestiture period had any adverse effect on the buyers and the process.
  • To what extent the staff’s review of buyers and monitors may have been inadequate.
  • Whether the orders have effectively defined the assets of an autonomous business (when that was the purpose).
  • Whether assets outside of the relevant market have been properly included in the divestiture package when necessary.
  • Whether Commission orders have effectively required sufficient technical assistance or other nurturing provisions when necessary.
  • Whether monitors have provided the oversight that the Commission expected.
  • Whether the respondent impeded the buyer’s ability to compete in the market.

Interviews with competitors and customers will likely cover these topics:

  • Identifying the leading suppliers (and their market shares) of the product before and after the remedy.
  • Whether the buyer competed in a manner that was as effective as the previous owner of the divested assets.
  • Whether any other significant changes took place in the market after the remedy was implemented (e.g., entry, exit, or other merger).
  • The interviewee’s views on how the merger would have affected the competitive environment absent the remedy.
  • The interviewee’s views about the market’s competitiveness before and after the acquisition and remedy.

For 15 orders involving divestitures of supermarkets, drug stores, funeral homes, hospitals, and other clinics, the FTC will send a questionnaire to the buyers of divested assets. Through the questionnaire, the Commission intends to learn about the buyer’s due diligence process, the adequacy of the divestiture package and the transitional services, and the buyer’s post-divestiture operations. Staff will determine, on a case-by-case basis, whether follow-up interviews with these buyers may be necessary.

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