Hey, Which Way Do We Kneel When Begging to Merge?
One of antitrust law’s most notorious features is its unpredictability. For example, two large companies that desire to merge their operations cannot know in advance whether their plan is lawful. Instead they must endure a “Mother may I?” procedure (known as “premerger notification program”) that forbids mergers until a federal agency has granted permission.
But which agency? As if the law’s uncertainty were not onerous enough, merging businesses often don’t know which agency will be interpreting that law in their particular case. Both the Department of Justice’s Antitrust Division and the Federal Trade Commission have overlapping authority and very different procedures for asserting coercive control over the companies’ future.
In the Wall Street Journal, Brent Kendall and Annie Gasparro nicely summarize the uncertainty confronting companies that have just commenced their supplication:
Justice and the FTC have different processes for conducting merger investigations, which potentially can affect how an antitrust review unfolds. The agencies’ differences also can have important ramifications in cases where the government chooses to bring a merger challenge.
The Justice Department process is considered more straightforward. DOJ has one decision maker — the head of the Antitrust Division — and if it wants to challenge a deal, it must go to federal court to do so.
The FTC is a five-member body (though one seat remains open) and the commission needs majority support to take action. What’s more, the commission has its own internal process in which it can file merger challenges. That means an FTC challenge can be tried in front of an administrative law judge, whose decision can be overruled by the commission. On the bright side for merging companies, they can appeal a negative FTC ruling to any federal appeals court of their choice.
Given the potentially more laborious FTC process, many antitrust lawyers have preferred to have their reviews conducted by the DOJ. That view, however, has become more mixed in recent years because the Justice Department hasn’t been shy about bringing big merger lawsuits, including its recent lawsuit against the merger of US Airways [and American Airlines] . . .