Press Releases
Congressman Moran Leads Letter to FTC Concerning Consumer Choice
Washington, DC,
March 9, 2023
Congressman Nathaniel Moran (TX-01) led his colleagues in a letter to the Federal Trade Commission (FTC) earlier today expressing their concerns regarding the Commission’s current approach to mergers and acquisitions, which has led to diminished options for consumers. He released the following statement regarding the letter: “Under the consumer welfare standard, which has been the industry standard for mergers for over 40 years, the FTC was able to effectively balance the needs of consumers with the need to treat businesses fairly. The FTC, under Chair Lina Khan, has abandoned these free-market principles that have stood through both Republican and Democratic administrations. As a result, the FTC is leaving great uncertainty among consumers and businesses alike while ‘picking winners and losers’ that fit their political agenda. “The Biden FTC is purposefully hampering the merger review process which thousands of businesses must rely on to remain competitive. Abandoning expedited merger reviews for small businesses threatens economic growth and stifles U.S. innovation. “The United States was founded on the American dream, but the regulatory decisions under the Biden Administration’s FTC interfere with these dreams by discouraging the growth and success of start-ups. We must stimulate development and free-market competition that will both benefit American consumers and incentivize innovation. “I am proud to lead my colleagues in demanding accountability and transparency from the FTC on behalf of consumers and innovators. We must continue to incentivize innovation, not stifle it, and guarantee consumers the ability to enjoy the benefits that come from a market not damaged from zealous overseers.” Co-signers include Reps. Andy Biggs (AZ-05), Jeff Van Drew (NJ-02), Scott Fitzgerald (WI-05), Barry Moore (AL-02), and Laurel Lee (FL-15). The full letter can be read below. ### Dear Chair Khan: We write to express our concern regarding the Federal Trade Commission’s (FTC) ill-advised current approach to mergers and acquisitions, an approach that stifles innovation, impedes competition, and diminishes consumer choice. The FTC’s decisions are decreasing the predictability in the merger review process that is critical for American enterprises to grow and innovate and for markets to function efficiently. As Members of Congress, we are concerned with the Biden FTC’s pursuit of a partisan agenda that expands agency power and discards decades of experience to the detriment of the American people. We urge the FTC to revert to a principled approach that puts consumers above partisan agendas and write to request information and documents relevant to Congress’s oversight. The consumer welfare standard, which the FTC had followed for over forty years, provides an important basis for merger review and enforcement by assessing the impact that a planned merger may have on consumers The analysis includes metrics such as changes in price and output, as well as product quality and innovation. Under this standard, enforcers must treat all businesses fairly, regardless of size, which supports the rule of law. Conversely, without the consumer welfare standard, the FTC can effectively “pick[] winners and losers” and centrally plan the economy. The Trump Administration understood the importance of focusing on consumer welfare and maintaining sound antitrust policy. For example, during the Trump Administration, the FTC kept the 2010 Horizontal Merger Guidelines, which courts have heavily relied on in analyzing transactions. Similarly, the FTC’s 2020 Vertical Merger Guidelines accounted for the effects that deals have on consumers. But in 2021, the Biden FTC voted—along party lines—to rescind those guidelines, even as the Biden Justice Department’s Antitrust Division left them in place. The FTC’s unilateral reversal has created uncertainty that is harming competition and the American people, and has imperiled the rule of law by allowing the merger review standard that is applied to vary depending upon which agency conducts the review. In addition to rejecting consumer-centric antitrust policy, the Biden FTC has needlessly slow-walked merger reviews and intentionally undermined dealmaking. Citing resource constraints and merger volume, the Biden FTC announced in early 2021 that it would suspend “early terminations,” which allow mergers that pose no competitive risk to close before a thirty-day waiting period. Accordingly, the FTC has been holding mergers—including some of the smallest and least competitively consequential—for at least thirty days. The Biden FTC’s approach has “introduce[d] inefficiency into market operation, harming consumers.” In some cases, the Biden FTC has also sent letters informing merging parties that they are still under investigation even after the expiration of the waiting period. These letters, often sent without a reason to believe the merger is unlawful, effectively extend investigations past the timeline that Congress has set for the FTC’s merger review. Threatening future litigation even when the FTC may have little reason to believe a deal is anticompetitive chills the growth and innovation of American businesses, and is inconsistent with Congress’s intent in establishing merger review. Despite receiving additional funding from Congress at the end of 2022, and a significant drop in merger activity, the FTC has not resumed early terminations and has continued to exceed the statutory deadline for reviewing mergers. Yet, according to Commissioner Christine Wilson, FTC “enforcement numbers under this administration are significantly lower than enforcement numbers under the Trump Administration.” One must wonder, then, if the Biden FTC is shirking its responsibility to investigate mergers effectively and efficiently, and instead wasting new funds on partisan projects like illegal rulemaking. Based on early indicators, it seems unlikely that the Biden FTC will re-embrace the consumer welfare standard. For example, the FTC’s Request for Information on Merger Enforcement foreshadows a skepticism toward mergers by dismissing out of hand potential procompetitive and cost-cutting justifications. Instead, the FTC seems poised to implement a new approach that focuses on factors that may be unrelated to sound, economics-based merger analysis. Additionally, it may be much harder for companies to pass the FTC’s scrutiny under any new merger guidelines, even when a merger will benefit consumers. Focusing on new considerations other than consumer welfare without accounting for relevant economic harms is a disservice to the American people. The Biden FTC’s approach to mergers and acquisitions ignores market realities. Many startups pursue the long-term goal of being acquired. Accordingly, the FTC’s actions in the merger space chill investment and discourage start-ups from growing and developing their businesses, because the prospect of an acquisition may disappear. This could have a lasting impact on the flourishing of U.S. markets. It is critical, now more than ever, to establish certainty in our marketplace that provides incentives for American innovators to continue competing. The American people would be best served if Biden antitrust enforcers would abandon partisan agendas and restore traditional antitrust principles and processes that promote competitive markets, transparency, and the rule of law. To allow us to conduct oversight of the FTC’s approach, please provide the following information and material:
Please provide this information as soon as possible but no later than 5:00 p.m. on March 23, 2023. Thank you for your attention to this matter. Sincerely, Nathaniel Moran Member of Congress Andy Biggs Member of Congress Jeff Van Drew Member of Congress Scott Fitzgerald Member of Congress Barry Moore Member of Congress Laurel Lee Member of Congress |