FTC tightens merger approval process in blow to Big Tech


Democrats at the Federal Trade Commission voted Wednesday to probe certain mergers more closely, which could lead to greater limits and uncertainty in corporate acquisitions of new startups, particularly within the tech industry.

In a partisan split, the trade commission, which has three Democratic commissioners and two Republican ones, voted 3-2 to end a 1995 agency policy that had limited the situations in which companies must give advance notice and seek pre-approval from the FTC for mergers.

The trade commission's two Republican commissioners, Noah Phillips and Christine Wilson, said during the open meeting on Tuesday that rescinding the merger policy injects greater uncertainty and instability into company acquisitions and could forestall some productive mergers.

The three Democratic commissioners at the agency, Chairwoman Lina Khan, Rohit Chopra, and Rebecca Slaughter, said during the meeting that policy rescission will discourage “frequent flier filers,” or corporations that repeatedly attempt to execute illegal mergers, because the trade commission will no longer be inhibited from using all the tools in its belt to be informed about and approve mergers.


The Hart-Scott-Rodino Antitrust Improvements Act of 1976 established the federal pre-merger notification program, which provides the FTC and the Department of Justice with information about large mergers and acquisitions before they occur. The companies trying to merge must wait for the two federal agencies to determine that the transaction is not unfair and will not negatively affect U.S. commerce under the antitrust laws before proceeding.

The merger policy that the trade commission rolled back Wednesday clarified the law in 1995, after the agency battled with Coca-Cola for seven years over whether the soda company had to give the FTC advance notice on acquisitions.


Coca-Cola failed to merge with Dr. Pepper in 1986 after a federal court sided with the trade commission's opposition to the deal, but the ensuing fight between the soda giant and the FTC resulted in the agency adopting a policy of only asking companies for advance notice and approval on mergers under “limited circumstances.” This policy has now been overturned.

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