Senate Antitrust Subcommittee Democrats Agree With FTC’s Ramirez That Smarter Act Isn't Necessary
FTC Chairwoman Edith Ramirez was supported in her critique of the Standard Merger and Acquisition Reviews Through Equal Rules (Smarter) Act by Democratic subcommittee members during a hearing Wednesday. Subcommittee Chairman Mike Lee, R-Utah, said S-2102 contains a series of important reforms and addresses the disparities between the antitrust authority granted to the FTC and Justice Department so the public and businesses can be assured the two agencies won't use that authority to review transactions differently. Wednesday's hearing comes a week after the House Judiciary Committee sent the House version of the bill (HR-2745) to the House floor despite protests from Democrats and Ramirez (see 1509300052).
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When DOJ tries to block a deal, it’s a pretty straightforward process, Lee said. But parties before the FTC are subject to an “onerous process” that requires a party to litigate twice, he said. Congress deliberately authorized the FTC to have a different antitrust review process from DOJ when it created the commission in 1914, Ramirez said. In the FTC antitrust review process, a preliminary injunction is litigated separately from the merits of the case, she said, whereas the Justice Department combines both. The FTC process is different, but is fair and works quite well, Ramirez said. Eliminating the agency’s ability to litigate cases in an administrative law court would undermine the effectiveness of the FTC, Ramirez said.
Lee said he understood Congress granted the authority to the FTC but said it was time to review that decision. Ramirez said there is no evidence FTC review of antitrust cases results in different outcomes than if DOJ were to review the cases and that the legislation may lead to unintended consequences that affect FTC's ability to preserve competition and prevent harms to consumers.
Smarter Act co-sponsor Sen. Orrin Hatch, R-Utah, asked Ramirez how the FTC can be both judge and jury when it comes to antitrust law, referring to the agency’s ability to use its administrative law process to stop a transaction if a federal court sides with the company initially. Ramirez said the commission rarely elects to continue the process to stop a deal if a court sides with the company, saying the commission hasn’t elected to bring a case before its administrative law court in two decades.
Sen. Richard Blumenthal, D-Conn., said the best part of the legislation is its title, adding the bill is “a solution in search of a problem.” Passage of the legislation could undermine antitrust authority during a time when transactions require more scrutiny than ever, Blumenthal said. Sen. Thom Tillis, R-N.C., disagreed, saying passage of the bill was important to ensure the government doesn’t have an advantage in antitrust law compared to businesses.
During a second panel, Covington & Burlington attorney Deborah Garza, who chaired the bipartisan Antitrust Modernization Commission, supported the Smarter Act, and asked the committee to consider other recommendations the commission made eight years ago in a report that inspired the legislation. The FTC isn’t acting unfairly, but its antitrust procedures are seen as unfair by business, Garza said. Baker & McKenzie’s David Clanton and Latham & Watkins’ Abbott Lipsky also supported the legislation. Wilson Sonsini’s Jonathan Jacobson said FTC administrative adjudication was an important safety net for those instances when a court gets a case “really really wrong.” Jacobson said it's a myth that one agency has an advantage over another and asked the committee to at least fix unspecified language issues in the legislation if the panel decides to move it forward.