For the third straight legislative session, the House Judiciary Committee has voted in favor of a bill—the Standard Merger and Acquisition Reviews Through Equal Rules (“SMARTER”) Act—that would amend the Clayton Act and Federal Trade Commission Act to align the standards and processes for the Federal Trade Commission’s (FTC) and Department of Justice’s (DOJ) review of proposed mergers and acquisitions. The SMARTER Act aims to eliminate the current differences in merger review that companies may face depending on whether the proposed merger is reviewed by the DOJ or the FTC.
Under the current system, parties proposing a deal file notice of the proposed deal with both the FTC and DOJ. However, generally only one antitrust agency will review the proposed merger. As a result, some mergers and acquisitions are reviewed by the FTC, and challenges are handled administratively under the FTC Act. Other mergers are reviewed by the DOJ, and challenges are adjudicated in federal court under the Clayton Act. If the SMARTER Act becomes law, the FTC would be required to litigate certain contested mergers in federal court, rather than by conducting its own administrative review. The bill would also create uniform preliminary injunction standards.
Two prior versions of the SMARTER Act passed in the House, but not in the Senate. It remains to be seen whether this latest attempt will fare differently, but there are several reasons to think it may have a better chance than its predecessors:
- In the previous Congress, House Republicans voted nearly unanimously for the bill. (The previous bill passed in the House even though it received only five Democrat “aye” votes.) This is the first time the SMARTER Act has been introduced when both the legislative and executive branches are controlled by Republicans.
- For the first time, the bill has two Democratic co-sponsors. The Democratic co-sponsors could indicate that there is now more bipartisan support than in the past.
- Edith Ramirez, the FTC Chairwoman when the prior versions of the bill were introduced, opposed the bill. Her position was that consumers were well-served by maintaining the option for FTC administrative review of mergers. According to Ramirez, the fear that the FTC abused its administrative process was misplaced because courts have the power to judicially review FTC decisions and, in practice, overwhelmingly affirmed FTC administrative decisions. President Trump has not yet nominated a new chairperson of the FTC, and so it is not yet clear whether that person will take a more favorable position toward the SMARTER Act. Acting FTC Chairwoman Maureen Ohlhausen has previously spoken in favor of harmonizing the standards for preliminary injunctions that both the FTC and DOJ must meet in federal court when challenging proposed mergers or acquisitions.
We will continue to track the bill’s progress.