The Federal Trade Commission’s recent direction under Chair Lina Khan has drawn considerable criticism across the business community for its politicization of antitrust enforcement actions. But what do those that work closely with the agency actually think?
Fortunately, a recent survey conducted by the USC Gould School of Law that surveyed a hundred antitrust practitioners has some answers.
By the numbers:
Overall, the vast majority of practitioners surveyed held negative views about the FTC’s merger review process under current leadership:
- 66% responded that the FTC’s current merger enforcement practices harm innovation and competition.
- 69% believe that the FTC has become “Less receptive to arguments regarding pro-growth competitive innovation.”
- 58% responded that when reviewing a merger, the FTC has reduced or eliminated its consideration of potential efficiency gains.
Respondents voiced similar, if less sharp views of the Department of Justice’s changes to antitrust enforcement:
- 35% believe the current DOJ’s merger enforcement practices harm innovation and competition.
- 52% believe the DOJ has become less receptive to arguments regarding the benefits of mergers to innovation.
These negative responses from practitioners resemble the perceptions of actual FTC employees as expressed in the agency’s own survey:
- From 2020 to 2021, respect for senior leadership in the agency fell 34 points from 83% to 49%.
- Over that same period, agency staff reported a 34-point drop from 87% to 53% in their belief that leadership maintained a high level of honesty and integrity.
The costs of the FTC’s regulate first, ask questions later agenda are becoming clear. Under current leadership, mergers cost more, take longer, and have become less certain. In interviews, practitioners agreed that “the time spent on lawyer hours, internal client hours, economic expert hours, and other internal costs to a merger” have risen. Delays are longer too. Merging parties and their counsel “have reported a lack of communication from agency staff until very late in the process, the initiation or termination of Second Requests without a clear explanation, and the refusal or inability to explain theories of harm motivating an agency’s investigation.” Finally, some companies have abandoned deals altogether where timing of financing windows matter greatly.
Mergers and acquisitions are important drivers of innovation and competition in the American economy. Where the Federal Trade Commission and Department of Justice intentionally make that process more difficult its consumers who ultimately pay the price.