U.S. Enforcement Policy and Procedure
Pages | 17-53 |
CHAPTER II
U.S. ENFORCEMENT POLICY AND PROCEDURE
A.The Concurrent Enforcement Authority of the U.S. Department
of Justice and the Federal Trade Commission
The Antitrust Division of the U.S. Department of Justice (DOJ or the
Division) and the Federal Trade Commission (FTC or the Commission)
share jurisdiction over mergers, acquisitions, and joint ventures under
Section7 of the Clayton Act (Section 7).1The agencies’ concurrent
enforcement authority has evolved since the passage of the Federal Trade
Commission Act (FTC Act)2nearly a century ago.
Between the enactment of the Sherman Act in 18903and the
enactment of the Clayton Act and FTC Act in 1914, the DOJ was the
sole federal agency charged with enforcing the nation’s antitrust laws.
During this twenty-four year period, the Sherman Act was the only
statutory authority the Division had to challenge anticompetitive
mergers.
In 1914, Congress passed the Clayton Act and the FTC Act. The
Clayton Act concentrated on certain practices that the Sherman Act did
not explicitly proscribe, such as mergers and interlocking directorates.4
The FTC Act established the Commission and charged the Commission
with enforcing the nation’s antitrust laws, but did not give it criminal
jurisdiction. The FTC did not supplant the DOJ, but became an
additional antitrust enforcer. As the Supreme Court later explained, it
was “the [c]ongressional intent to create a body of experts who shall gain
experience by length of service; a body which shall be independent of
executive authority, except in its selection, and free to exercise its
1. 15 U.S.C. §18. For a discussion of the strengths and weaknesses of the
current dual system, see ANTITRUST MODERNIZATION COMM’N,REPORT
AND RECOMMENDATIONS129-32 (2007) [hereinafter AMCREPORT],
available athttp://govinfo.library.unt.edu/amc/report_recommendation/
amc_final_report.pdf.
2. 15 U.S.C. §§41-48.
3. Id. § 1.
4. SeeFED.TRADE COMM’N, FTCGUIDE TO THE ANTITRUST LAWS,
available at http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm.
17
18Mergers and Acquisitions
judgment without the leave or hindrance of any other official or any
department of the government.”5
In 1948, the DOJ and the FTC signed a formal liaison agreement
creating a mechanism for resolving conflicts that might arise from the
agencies’ concurrent jurisdiction.6The process established by this
agreement serves as the basis for agency cooperation today.
The determination of which agency will handle a potential
investigation of a transaction is known as “clearance.” Before initiating a
new investigation, if either agency wants clearance to investigate the
proposed transaction, it briefly describes the scope of the investigation to
the other agency, including company names and the relevant product and
geographic markets.7Generally, the investigation will be “cleared” to the
agency that has the greater expertise with the relevant product.8This
clearance process enables the agencies to avoid duplicative
investigations.9Disputes occasionally arise, however, over which agency
5. Humphrey’s Ex’r v. United States, 295 U.S. 602, 625-26 (1935).
6. See LIAISON AGREEMENT OF THE FTCAND THE ANTITRUST DIVISION,
reprinted in4 Trade Reg. Rep. (CCH) ¶9,565.05, andANTITRUST
DIVISION MANUAL, Ch. VII (5th ed. 2014), available at
http://www.justice.gov/atr/public/divisionmanual/chapter7.pdf
(collectively discussing concurrent jurisdiction).
7. “Under the 1948 liaison agreement, the agencies exchanged index cards
with information regarding any new proposed investigations. If the other
agency did not have an investigation of the matter pending, the agency
sending the notification could proceed without further liaison. This
exchange of information continues today, although it is now
computerized.” MERGERS AND ACQUISITIONS:UNDERSTANDING THE
ANTITRUST ISSUES16 n.5 (Robert S. Schlossberg ed., 3d ed. 2008).
8. FED.TRADE COMM’N &U.S.DEP’T OF JUSTICE, DOJ/FTCCLEARANCE
PROCEDURES FOR INVESTIGATIONS(1993), reprinted in65 Antitrust &
Trade Reg. Rep. (BNA) 746 (Dec. 9, 1993). The 1993 memorandum
elaborates that “product” means, in order of significance, the same
product, a substitute, an input or output, and a product used with the
subject product in a single manufacturing process. The agency’s expertise
is evaluated in terms of its having engaged in a “substantial antitrust
investigation” in the relevant industry within the preceding five years.A
“substantial antitrust investigation,” in turn, means one in which requests
for additional information under the HSR Act, civil investigative
demands, or subpoenas were issued and documents submitted and
reviewed. Id. at 746-47.
9. Deborah Platt Majoras, Deputy Ass’t Att’y Gen., Antitrust Div., U.S.
Dep’t of Justice, Address Before the Houston Bar Ass’n Antitrust and
U.S. Enforcement Policy and Procedure19
has expertise that is more directly applicable to a particular matter. These
disputes are typically resolvedby agency staff assigned to liaise with
each other, but may require review at higher levels of authority—
ultimately the Chairman of the FTC and the Assistant Attorney General
of the Division, if necessary.10
In March 1995, the antitrust agencies jointly announced the
implementation of additional procedures to improve the clearance
process to effectuate the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (HSR Act).11As part of these improvements, the agencies
committed to resolve clearance disputes within nine business days after
receipt of notification under the HSR Act.12However, despite the
adoption of these new procedures, clearance disputes have continued,
and in a relatively small number of more serious cases, disputes can
consume much of the thirty-day initial HSR waiting period.13In these
situations, the parties may pull and refile the premerger notification,
restarting the thirty-day review period.14
On March 5, 2002, the agencies announced that they had entered into
a Memorandum of Agreement15(2002 Agreement) establishing revised
clearance procedures for merger reviews. The Agreement attempted to
reduce the number of clearance disputes by delineating the industries that
each agency would cover based on historical expertise. The revised
Trade Regulation Section: Houston, We Have a Competitive Problem:
How Can We Remedy It? (Apr. 17, 2002), available athttp://www.
justice.gov/atr/public/speeches/11112.htm.
10. See AMCREPORT, supranote 1, a t 132-33.
11. 15 U.S.C. § 18a.
12. U.S.DEP’T OF JUSTICE &FED.TRADE COMM’N, HART-SCOTT-RODINO
PREMERGER PROGRAM IMPROVEMENTS(1995), reprinted in6 Trade Reg.
Rep. (CCH) ¶42,522.
13. SeeAMCREPORT, supranote 1, at 134.
14. See AMCREPORT,supranote 1, at 134; see alsoAm. Bar Ass’n,
Comments Regarding Dual Federal Merger Enforcement, Submitted to
the Antitrust Modernization Commission (Oct. 28, 2005). The “pull and
refile” approach can also take place during a fifteen-day waiting period
incident to an all-cash tender offer, although that is far less common.
AMCREPORT,supranote 1, at 155.
15. MEMORANDUM OF AGREEMENT BETWEEN THE FEDERAL TRADE
COMMISSION AND THE ANTITRUST DIVISION OF THE UNITED STATES
DEPARTMENT OF JUSTICE CONCERNING CLEAR ANCE PROCEDURES FOR
INVESTIGATIONS(2002), available athttp://www.justice.gov/atr/public/
10170.htm.
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