A Republican lawmaker is readying a bill that would require businesses subsidized by foreign governments to disclose that information when they pursue large mergers subject to US regulatory review, reported CNBC.
The bill, led by Rep. Scott Fitzgerald, R-Wisc, and tentatively named the “Stopping Foreign Government Subsidies for Mergers Act,” would require businesses backed by state-owned entities to notify regulators of that backing when they report a deal of more than $92 million in value.
That additional information can help regulators assess how a company might act once merged, Republican Federal Trade Commissioner Noah Joshua Phillips, who supports the legislation, told CNBC in an interview Wednesday
“Our presumptions in the law and the way we do our work are based on the notion fundamentally that firms profit maximize. They seek to make money,” Phillips said. “But state-owned entities don’t necessarily have the pursuit of profit as their ultimate motive, and as a result, they may not act in the same way as the companies that we normally look at do.”
A firm that values certain political objectives over profits might make a different calculation when it comes to the risk of pursuing anticompetitive conduct, like steeply undercutting rival prices only to raise them later on. While Phillips declined to speculate on the types of conduct in which a state-owned entity might engage, he said it would help to know their potential incentives in order to assess the facts of each individual case.
As it stands, regulators may become aware of a foreign government subsidy in a merger case, but Phillips said requiring that information up-front will allow them to “develop expertise and ask the right questions.”
The bill builds on a recommendation last year from the bipartisan U.S.-China Economic and Security Review Commission. In its annual report to Congress, the commission recommended the FTC have a system in place to determine how proposed transactions are influenced by such foreign government support.
Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.
Featured News
BHP Unveils £31bn Mining Megamerger Proposal with Anglo American
Apr 25, 2024 by
nhoch@pymnts.com
ByteDance Prefers Shutdown Over Sale of TikTok Amid US Ban Threats
Apr 25, 2024 by
CPI
FCC Votes to Restore Net Neutrality Rules
Apr 25, 2024 by
nhoch@pymnts.com
Apple Rejects Spotify’s Updated App Over In-App Pricing Disclosure
Apr 25, 2024 by
CPI
FCC Set to Reinstate Net Neutrality Rules Today
Apr 25, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Economics of Criminal Antitrust
Apr 19, 2024 by
CPI
Navigating Economic Expert Work in Criminal Antitrust Litigation
Apr 19, 2024 by
CPI
The Increased Importance of Economics in Cartel Cases
Apr 19, 2024 by
CPI
A Law and Economics Analysis of the Antitrust Treatment of Physician Collective Price Agreements
Apr 19, 2024 by
CPI
Information Exchange In Criminal Antitrust Cases: How Economic Testimony Can Tip The Scales
Apr 19, 2024 by
CPI