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FTC changes its procedures for challenging mergers

Tracey Samuelson Mar 16, 2015

The Federal Trade Commission has announced changes to the way it challenges mergers it believes are anti-competitive or bad for consumers. The new rules come as the commission faces criticism from Republican lawmakers, some of whom are pitching legislation that would press the FTC to rely on federal courts instead of its own in-house system.

Under its old procedures, when the FTC views a merger as anti-competitive, it typically goes down two different paths: It asks a federal judge to issue a preliminary injunction — which essentially freezes the merger– while it also holds a trial in its own in-house administrative court system.

Under the new rules, if the FTC’s request for a preliminary injunction is denied, merging parties can request to withdraw from the administrative proceeding — a request which will now be automatically granted. This allows the parties to be able talk to the commission, which they can’t do when the case is ongoing, and gives them the opportunity to try to settle or convince the commissioners to abandon the administrative case altogether. However, the FTC retains the option to re-start administrative proceeding if it believes it’s in the public’s interest.

This approach means companies will get a faster resolution to their cases, says John Coffee,  a professor at Columbia Law School.

“This is a big victory for the corporate community,” he explains. “Mergers need to be resolved in the near term. If they stretch on for a year without being resolved, many of the benefits are lost.”

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