In a statement on Monday, October 25, the US Federal Trade Commission (FTC) announced it was restoring its practice of requiring companies that previously pursued an anticompetitive deal to get prior approval for certain future transactions, even very small ones.
The FTC said in a statement that it had already put this policy in place for dialysis company DaVita following the company’s purchase of the University of Utah Health’s dialysis clinics.
Going forward, the policy would be in effect for any company that wins deal approval through a divestiture, the FTC said in a statement. The policy includes deals that normally would be too small to be reported to antitrust enforcers. Companies that abandon a transaction are less likely to face the restriction, the agency stated.
“The FTC should not have to waste valuable time and resources investigating clearly anticompetitive deals that should have died in the boardroom,” said Holly Vedova, Director of the Bureau of Competition. “Restoring the long-standing prior approval policy forces acquisitive firms to think twice before going on a buying binge because the FTC can simply say no.”
The application of the Prior Approval Policy Statement will protect consumers and deter merging parties from pursuing anticompetitive deals. The consequences of attempting an anticompetitive deal will be more severe and the bar for consummating further anticompetitive acquisitions will be higher.
Parties settling an anticompetitive deal with a consent order will need the Commission’s permission to close any further acquisition in an affected market, and sometimes in broader markets depending on the circumstances, for at least ten years. The FTC will weigh a number of factors in determining the scope of a prior approval provision, including the nature of the transaction, the level of market concentration and degree to which the transaction increases market concentration, the degree of pre-merger market power, the parties’ history of acquisitiveness, and evidence of anticompetitive market dynamics.
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