[Congressional Record Volume 164, Number 75 (Wednesday, May 9, 2018)]
[House]
[Pages H3851-H3857]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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STANDARD MERGER AND ACQUISITION REVIEWS THROUGH EQUAL RULES ACT OF 2018
Mr. GOODLATTE. Mr. Speaker, pursuant to House Resolution 872, I call
up the bill (H.R. 5645) to amend the Clayton Act and the Federal Trade
Commission Act to provide that the Federal Trade Commission shall
exercise authority with respect to mergers only under the Clayton Act
and only in the same procedural manner as the Attorney General
exercises such authority, and ask for its immediate consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 872, the bill
is considered read.
The text of the bill is as follows:
H.R. 5645
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Standard Merger and
Acquisition Reviews Through Equal Rules Act of 2018''.
SEC. 2. AMENDMENTS TO THE CLAYTON ACT.
The Clayton Act (15 U.S.C. 12 et seq.) is amended--
(1) by striking section 4F and inserting the following:
``SEC. 4F. ACTIONS BY ATTORNEY GENERAL OF THE UNITED STATES
OR THE FEDERAL TRADE COMMISSION.
``(a) Whenever the Attorney General of the United States
has brought an action under the antitrust laws or the Federal
Trade Commission has brought an action under section 7, and
the Attorney General or Federal Trade Commission, as
applicable, has reason to believe that any State attorney
general would be entitled to bring an action under this Act
based substantially on the same alleged violation of the
antitrust laws or section 7, the Attorney General or Federal
Trade Commission, as applicable, shall promptly give written
notification thereof to such State attorney general.
``(b) To assist a State attorney general in evaluating the
notice described in subsection (a) or in bringing any action
under this Act, the Attorney General of the United States or
Federal Trade Commission, as applicable, shall, upon request
by such State attorney general, make available to the State
attorney general, to the extent permitted by law, any
investigative files or other materials which are or may be
relevant or material to the actual or potential cause of
action under this Act.'';
(2) in section 5--
(A) in subsection (a) by inserting ``(including a
proceeding brought by the Federal Trade Commission with
respect to a violation of section 7)'' after ``United States
under the antitrust laws''; and
(B) in subsection (i) by inserting ``(including a
proceeding instituted by the Federal Trade Commission with
respect to a violation of section 7)'' after ``antitrust
laws'';
(3) in section 11, by adding at the end the following:
``(m)(1) Except as provided in paragraph (2), in enforcing
compliance with section 7, the Federal Trade Commission shall
enforce compliance with that section in the same manner as
the Attorney General in accordance with section 15.
``(2) If the Federal Trade Commission approves an agreement
with the parties to the transaction that contains a consent
order with respect to a violation of section 7, the
Commission shall enforce compliance with that section in
accordance with this section.'';
(4) in section 13, by inserting ``(including a suit,
action, or proceeding brought by the Federal Trade Commission
with respect to a violation of section 7)'' before
``subpoenas''; and
(5) in section 15, by inserting ``and the duty of the
Federal Trade Commission with respect to a violation of
section 7,'' after ``General,''.
SEC. 3. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT.
The Federal Trade Commission Act (15 U.S.C. 41) is
amended--
(1) in section 5(b), by inserting ``(excluding the
consummation of a proposed merger, acquisition, joint
venture, or similar transaction that is subject to section 7
of the Clayton Act (15 U.S.C. 18), except in cases where the
Commission approves an agreement with the parties to the
transaction that contains a consent order)'' after ``unfair
method of competition'';
(2) in section 9, by inserting after the fourth
undesignated paragraph the following:
``Upon the application of the commission with respect to
any activity related to the consummation of a proposed
merger, acquisition, joint venture, or similar transaction
that is subject to section 7 of the Clayton Act (15 U.S.C.
18) that may result in any unfair method of competition, the
district courts of the United States shall have jurisdiction
to issue writs of mandamus commanding any person or
corporation to comply with the provisions of this Act or any
order of the commission made in pursuance thereof.'';
(3) in section 13(b)(1), by inserting ``(excluding section
7 of the Clayton Act (15 U.S.C. 18) and section 5(a)(1) with
respect to the consummation of a proposed merger,
acquisition, joint venture, or similar transaction that is
subject to section 7 of the Clayton Act (15 U.S.C. 18))''
after ``Commission''; and
(4) in section 20(c)(1), by inserting ``or under section 7
of the Clayton Act (15 U.S.C. 18), where applicable,'' after
``Act,''.
SEC. 4. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Effective Date.--Except as provided in subsection (b),
this Act and the amendments made by this Act shall take
effect on the date of the enactment of this Act.
(b) Application of Amendments.--The amendments made by this
Act shall not apply to any of the following that occurs
before the date of enactment of this Act:
(1) A violation of section 7 of the Clayton Act (15 U.S.C.
18).
(2) A transaction with respect to which there is compliance
with section 7A of the Clayton Act (15 U.S.C. 18a).
(3) A case in which a preliminary injunction has been filed
in a district court of the United States.
The SPEAKER pro tempore. The bill shall be debatable for 1 hour
equally divided and controlled by the chair and ranking minority member
of the Committee on the Judiciary.
After 1 hour of debate, it shall be in order to consider the
amendment printed in House Report 115-664, if offered by the Member
designated in the report, which shall be considered read, shall be
separately debatable for the time specified in the report equally
divided and controlled by the proponent and an opponent, and shall not
be subject to a demand for a division of the question.
The gentleman from Virginia (Mr. Goodlatte) and the gentleman from
New York (Mr. Nadler) each will control 30 minutes.
The Chair recognizes the gentleman from Virginia.
Permission to Postpone Proceedings on Adopting Amendment to H.R. 5645
Mr. GOODLATTE. Mr. Speaker, I ask unanimous consent that the question
of adopting the amendment to H.R. 5645 may be subject to postponement
as though under clause 8 of rule XX.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Virginia?
There was no objection.
General Leave
Mr. GOODLATTE. Mr. Speaker, I ask unanimous consent that all Members
have 5 legislative days to revise and extend their remarks and include
extraneous material on H.R. 5645.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Virginia?
There was no objection.
Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may
consume.
In 1914, Congress passed the Federal Trade Commission Act, marking
the
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beginning of a dual antitrust enforcement regime in the United States.
Because both Department of Justice and the Federal Trade Commission
enforce our Nation's antitrust laws, companies may, and often do, have
different experiences when interacting with one agency relative to the
other. One area in which the disparity can be the most striking and
troubling is in the merger review process.
When a company wishes to merge with or purchase another company, it
must notify both antitrust enforcement agencies of the proposed
transaction. The Department of Justice and the Federal Trade Commission
then determine which agency will be responsible for reviewing the
transaction. As there are no fixed rules for making this determination,
it can appear that the decision is made on the basis of a flip of a
coin.
There are two substantial differences that companies face based on
the identity of the antitrust enforcement agency that reviews the
companies' proposed transaction.
The first difference arises if the agency seeks to prevent the
transaction by pursuing a preliminary injunction in Federal court. A
different legal standard is applied to a preliminary injunction request
based solely on the identity of the requesting antitrust enforcement
agency.
The second difference lies in the process available to each antitrust
enforcement agency to prevent a transaction from proceeding. The FTC
may pursue administrative litigation against a proposed transaction,
even after a court denies its preliminary injunction request. In
contrast, DOJ cannot pursue administrative litigation.
There is no justification for these disparities in the merger review
processes and standards. The bipartisan Antitrust Modernization
Commission recommended that Congress remove these disparities, and the
bill before us today, the Standard Merger and Acquisition Reviews
Through Equal Rules Act, or the SMARTER Act, does just that. I applaud
Representative Handel for introducing this important legislation that
will enhance the transparency, predictability, and credibility of the
antitrust merger review process.
By enacting the SMARTER Act into law, Congress will ensure that
companies no longer will be subjected to fundamentally different
processes and standards based on the flip of a coin. Notably, the
legislation has garnered the support of former and current FTC
commissioners, including former Chairman David Clanton, former
Commissioner Josh Wright, and current Commissioner Maureen Ohlhausen.
The SMARTER Act is an important step toward assuring that our
Nation's antitrust laws are enforced in a manner that is fair,
consistent, and predictable.
Mr. Speaker, I urge my colleagues to vote in favor of this good
government bill, and I reserve the balance of my time.
Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in opposition to H.R. 5645, the Standard Merger
and Acquisition Reviews Through Equal Rules Act. This bill would
significantly undermine the Federal Trade Commission's ability to
enforce the Nation's antitrust laws, which help protect Americans from
anticompetitive behavior in the marketplace. In the guise of
harmonization with the Department of Justice, it would eliminate the
FTC's administrative litigation enforcement authority with respect to
corporate mergers and other transactions. It would also change and
potentially increase the burden the FTC must demonstrate in court when
seeking a preliminary injunction against the proposed merger.
In doing so, the bill would undercut a critical tool that the FTC
relies on to promote competition. It also risks sacrificing the
fundamental nature of the FTC as an independent administrative agency,
rather than an executive department, subject to the political whims of
the President. This blatant attack on the FTC's congressionally
mandated independence contravenes more than a century of legislative
intent.
In 1914, Congress responded to a wave of mergers and corporate abuses
by establishing the FTC as an independent body of experts tasked with
developing and advancing competition policy free from political
pressure. In doing so, Congress specifically gave the Commission broad
enforcement and investigatory authorities, including the power to
challenge anticompetitive mergers and other conduct through
administrative litigation.
This broad grant of statutory authority was not accidental. Louis
Brandeis, a visionary architect of our Nation's competition system,
advocated for the embrace of administrative litigation during Congress'
consideration of the FTC Act, and President Woodrow Wilson said such
authority was critical to the FTC's mission ``to warn where things were
going wrong and assist instead of check.''
As former Republican FTC Chairman William Kovacic warned: ``Without a
substantial, effective administrative litigation program, the aim of
making the Commission an influential competition policy tribunal could
not be accomplished.''
Nevertheless, this bill would eliminate this critical tool for
promoting competition and, in the process, would erode the Commission's
unique qualities and independence.
To further undermine the Commission's independence, the bill would
also require the FTC to meet the same standard in court that the
Justice Department meets when seeking a preliminary injunction against
the proposed merger. But the FTC and the DOJ are two different agencies
with different missions and different traditions.
Under current law, the Commission, by statute, must show that a
preliminary injunction ``would be in the public interest.'' The Justice
Department, on the other hand, has no statutory standard and must
simply meet the common law preliminary injunction standard, such as the
balance of equities and the risk of irreparable harm.
As our Nation's leading antitrust enforcers have previously
testified, there is no practical difference between the standards or
evidence that the Commission has abused its authority. So it is
entirely unclear what problem the bill is attempting to solve. But in
making this change, this bill could cause unnecessary confusion for the
courts or could signal a desire to increase the burden on the agency to
demonstrate the harms of an anticompetitive merger. That result alone
is unacceptable.
But even more fundamentally, this legislation is a step in the wrong
direction for our economy and for the prosperity and security of all
Americans. The decline of antitrust enforcement over the past several
decades has been an economic catastrophe for millions of workers who
have lost their jobs or seen their wages lowered. It has resulted in
fewer choices and higher prices for consumers, including increased
costs for healthcare, prescription drugs, and other essential goods and
services.
The importance of robust antitrust enforcement is not simply a
question of preventing higher prices for consumers. In the absence of
competition, employers have the power to suppress the wages and
mobility of American workers through anticompetitive contracting
practices, such as noncompete clauses and no-poach agreements.
And when large corporations run amok, locally owned businesses, the
economic lifeblood of our communities, wither on the vine. Concentrated
economic power is also a serious threat to our vibrant democracy. Large
corporations with an outsized role in the policymaking process are able
to further entrench their dominance through favorable rules and
enforcement decisions.
And when a large corporation with market power has the ability to
control the flow of information, it also has the power to shape public
opinion in ways that erode democratic values and undermine the voice of
the many in favor of the outsized profits of the few.
By further weakening our antitrust laws, H.R. 5645 would accelerate
this disturbing trend. Accordingly, I must oppose this legislation and
urge my colleagues to vote against this very bad bill.
Mr. Speaker, I reserve the balance of my time.
Mr. GOODLATTE. Mr. Speaker, I yield as much time as she may consume
to the gentlewoman from Georgia (Mrs. Handel), the chief sponsor of the
legislation.
Mrs. HANDEL. Mr. Speaker, I thank Chairman Goodlatte for the
opportunity to bring this bill forward. I rise
[[Page H3853]]
today in support of H.R. 5645, the Standard Merger and Acquisition
Reviews Through Equal Rules Act, or the SMARTER Act.
Mr. Speaker, the SMARTER Act is a much-needed piece of legislation to
harmonize and modernize our antitrust procedures. Despite the shared
responsibilities for the antitrust review between the FTC and the DOJ,
both agencies follow dramatically different review processes, meaning
that businesses are held to conflicting standards and procedures,
depending on which agency actually conducts the review. And that
review, as Chairman Goodlatte pointed out, is essentially a coin toss.
We can do better than that. The SMARTER Act in no way weakens or
undermines our antitrust review process. It does not prevent or hinder
either agency from conducting a full and thorough review.
Rather, the SMARTER Act actually strengthens the antitrust review
process by injecting greater consistency, more transparency, and
enhance consumer protection when we have these mergers and
acquisitions.
With that, I urge my colleagues to support the SMARTER Act.
Mr. NADLER. Mr. Speaker, I yield 6 minutes to the the gentleman from
Rhode Island (Mr. Cicilline), the distinguished ranking member of the
Regulatory Reform, Commercial and Antitrust Law Subcommittee.
Mr. CICILLINE. Mr. Speaker, I thank the gentleman from New York for
yielding.
Mr. Speaker, I rise in strong opposition to H.R. 5645, the so-called
SMARTER Act, an assault on the Federal Trade Commission's ability to
vigorously promote competition through merger enforcement.
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Over a century ago, Congress responded to waves of consolidation by
creating the Federal Trade Commission to promote, development, and
protect competition and the antitrust laws.
There is longstanding, bipartisan consensus that the Commission's use
of administrative litigation to address anticompetitive mergers and
conduct is core to this mission. This includes the former Republican
and Democratic chairs of the Commission under George W. Bush and the
Obama administrations, who have each raised serious concerns about this
legislation, precisely because it eliminates a tool that has been
critical in combating anti-competitive mergers and conduct, including
mergers that would have raised Americans' cost of healthcare.
Top Republican antitrust enforcers have long supported the use of
administrative litigation in merger enforcement to promote competition
and develop the antitrust laws.
In 2003, Joseph Simons, who was appointed by President Trump and
recently confirmed as the chairman of the Commission, stated as
director of the FTC's Bureau of Competition that administrative
litigation has ``substantial public policy benefits.'' He also referred
to this tool as ``an instrument for developing the law'' that
``increases the transparency of Commission decisionmaking through
carefully written opinions that accompany a Commission final litigated
order can give considerable guidance to the bar and the business
community on applicable standards and enforcement policy.''
And in 2004, Barry Nigro, who also served as a director of the FTC's
Bureau of Competition under the George W. Bush administration, and was
appointed by President Trump to serve in the Justice Department's
Antitrust Division, stated that the ``volume of administrative
litigation is no accident. It reflects our belief in administrative
litigation as a way to take advantage of the FTC's expertise in the
development of antitrust jurisprudence, particularly in the kind of
complex matters that the FTC was created to address.''
Nevertheless, proponents of the SMARTER Act argue that the outcome of
a transaction should not depend on a ``coin flip'' to determine which
antitrust agency will review a transaction. But this claim is
untethered from how antitrust enforcement actually works in the vast
majority of cases. In fact, the determination of the moving party is
determined by each agency's jurisdictional district, or areas committed
by statute, and consistent with a well-developed body of case law, and
not by a coin toss.
In the most comprehensive study of administrative litigation to date,
Republican FTC Commissioner Maureen Ohlhausen debunked procedural
concerns with administrative litigation as ``mostly anecdotal or
theoretical,'' concluding it has been a transformative tool for
advancing competition policy.
And last Congress, Jonathan Jacobson, a leading antitrust attorney,
who currently serves as the chair of the American Bar Association's
section on antitrust law, testified that, in his decades of practice,
he has never seen a merger that turned on the differences that the
SMARTER Act seeks to address. In fact, less than 2 percent of all
mergers are blocked by the antitrust agencies, and an even smaller
percentage of these cases go to trial.
The FTC also has a pristine record when using this authority. It has
won six out of seven cases before the Supreme Court, and five of these
were brought through administrative litigation.
We should, therefore, be deeply skeptical about baseless speculation
and support of the bill. Empty rhetoric is no substitute for evidence
that the SMARTER Act actually solves a real problem.
But even more importantly, this bill is a major step in the wrong
direction on making our economy work for everybody. There is
overwhelming evidence that concentrated economic power is at historic
levels in this country, and has structurally weakened competition on an
economy-wide basis.
This lack of competition is a fundamental threat to the economic
opportunity of hardworking Americans who want lower prices, more and
better services, and better wages. We need more competition, not less.
As the nonpartisan Open Markets Institute notes, ``Given the severity
of the concentration problem in America today, and its economic and
political consequences, Congress should be looking to enhance the
powers of all of America's antimonopoly agencies.''
House and Senate Democrats have proposed a better deal to enhance
competition to reduce lower prices and more choices for consumers.
Instead of undermining antitrust enforcement on the basis of purely
speculative harms--as H.R. 5645 would do--we should be giving the
antitrust agencies the resources and tools they need to robustly
enforce the law.
In closing, I urge my colleagues to oppose this legislation, which
does nothing to reduce concentrated economic power or address the
economic challenges working people face every day and, in fact, will
make the problem worse. It will make it easier to consolidate economic
power in the way that undermines consumer choices, consumer costs, and
will ultimately undermine hardworking American families.
Mr. Speaker, I urge my colleagues to vote ``no,'' and I thank the
gentleman for yielding.
Mr. GOODLATTE. Mr. Speaker, I reserve the balance of my time.
Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the nonpartisan Open Markets Institute, in its
opposition to H.R. 5645 states: ``Given the severity of the
concentration problem in America today, and its economic and political
consequences, Congress should be looking to enhance the powers of all
of America's antimonopoly agencies.''
I strongly agree: Congress should be strengthening, not weakening,
our competition system to protect economic opportunity, innovation, and
choice. That is why I have joined several of my Democratic colleagues--
Representatives Joe Crowley, David Cicilline, and Keith Ellison--in
introducing a package of bold economic measures to strengthen
protections that will help ensure that hardworking Americans have more
economic opportunity by ending anticompetitive employment practices.
This package includes H.R. 5642, the Restoring and Improving Merger
Enforcement Act, legislation that I introduced to prohibit the
consideration of false economic efficiencies--like corporate layoffs,
actually costing employment--to justify anticompetitive mergers.
But rather than address these important measures, which would
actually
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help American workers and consumers, or give the antitrust agencies the
resources they need to really promote competition, this bill would do
the opposite by undermining the FTC's ability to vigorously enforce
antitrust laws under the guise of attempting to solve a problem that
does not exist.
I would submit that an economy in which we are down to four major
airlines and two major railroads, and going in the same direction in
almost every other segment of the economy, we should not be weakening
our antitrust laws and our antitrust enforcement, we should be
strengthening them. This bill goes in exactly the wrong direction and
is guaranteed to further increase the concentration of economic power
in our economy, and to further decrease the bargaining power that
workers have to get decent wages and working conditions.
Mr. Speaker, this is a deeply anti-employee bill, it is a pro-
monopoly bill, and it is a very anti-economic growth bill. I urge my
colleagues to oppose this deeply flawed measure, and I yield back the
balance of my time.
Mr. GOODLATTE. Mr. Speaker, this is a good bill, I urge my colleagues
to support it, and I yield back the balance of my time.
Ms. JACKSON LEE. Mr. Speaker, I rise in opposition to H.R. 5645, the
Standard Merger and Acquisition Reviews Through Equal Rules Act--
otherwise known as the SMARTER Act.
Mr. Speaker, this bill is not about creating equal rules or
implementing ``smarter'' legislation.
Rather, it is about attacking the administrative authority of the
Federal Trade Commission (FTC).
H.R. 5645 is an unnecessary measure that would fundamentally
undermine the FTC's independent enforcement authority and ability to
prevent anti-competitive mergers.
As we all know, the FTC was created by Congress with the specific
intent of creating an independent antitrust enforcement agency and
supplemental authority to the Department of Justice (DOJ).
Specifically, if enacted, the SMARTER Act would strip the FTC of its
power by eliminating the agency's authority to enforce antitrust laws
in larger merger cases, and by blocking its ability to use its
administrative proceedings to stop a harmful merger transaction.
The bill seeks to do so by requiring that the FTC use the same
enforcement process as the DOJ.
This proposed sweeping change undercuts the FTC's administrative
litigation process for contested mergers or acquisitions and
effectively removes the very core and functioning character of this
agency.
Moreover, reducing the FTC's independence directly conflicts with
Congress's intent in creating this antitrust enforcement agency and
policymaking body as a distinct and independent shield from political
and executive interference.
As enforcers of Section 7 of the Clayton Act, both the FTC and the
DOJ have the authority and responsibility to prohibit mergers and
acquisitions that would ``substantially lessen competition'' or ``tend
to create a monopoly''.
Under this enforcement authority, these agencies serve to complement
each other, and have developed over the years to specialize in
particular industries and markets.
Based upon historical experience and coordinated developments, the
FTC serves to protect consumers and consumer spending. For example,
healthcare, pharmaceuticals, professional services, food, energy, and
certain high-tech industries like computer technology and internet
services.
Whereas, the DOJ typically assumes a specialized focus on larger
corporate industries like telecommunications, banks, railroads, and
airlines.
Thus, while the FTC and the DOJ have operated with a shared
responsibility of enforcing federal antitrust laws, these two federal
agencies are unique and each retain exclusive authority of certain
conduct.
Serving as joint enforcement agencies for over 100 years, the FTC and
DOJ rely upon each other to coordinate agency jurisdiction and
harmonized standards and practices.
The SMARTER Act is simply unnecessary as it fails to put forth any
meaningful effort to enhance or rectify any expressed concerns
governing these longstanding agency operations.
In particular, in 2002 Congress sought to review and amend antitrust
laws and policies in light of the changing economy and rise in
technological advances.
In 2007 a report issued by the Antitrust Modernization Commission
(AMC) set forth specific recommendations for the FTC to eliminate real
or perceived disparities in the review process for merger transactions.
According to the AMC, Congress should seek to ensure that the same or
comparable standard is used when seeking a preliminary injunction
against a potentially anticompetitive transaction.
However, the SMARTER Act goes beyond this recommendation and seeks to
chip away and carve out the entire administrative adjudication
authority of the FTC.
In order to identify potential violations of the Clayton Act, the FTC
and the DOJ review proposed merger transactions pursuant to the Hart-
Scott-Rodino Antitrust Improvements Act (the HSR Act), which provides
advance notice and sets forth guidelines on large merger and
acquisition transactions.
The heart of this concern is the alternate means by which the FTC and
DOJ carry out their enforcement roles during this HSR pre-merger
process.
Namely, H.R. 5645 is curiously motivated by the preliminary
injunction process utilized by the FTC and the DOJ to halt proposed
transactions that would violate the Clayton Act if completed.
Additionally, the DOJ typically consolidates the preliminary and
permanent injunction proceedings, while the FTC typically only pursues
preliminary injunctions.
While some argue that proposed transactions reviewed through the FTC
would be treated more leniently than those reviewed through the DOJ,
this assertion has not been fully substantiated by the AMC.
The pre-merger review process and the injunction standards utilized
by the FTC and DOJ are the very procedural steps that characterize and
distinguish the respective enforcement roles of these agencies.
This supposed area of concern addresses only a small fraction of
proposed transactions, as the vast majority of merger and acquisition
proposals are found to not be in violation of the Clayton Act upon
undergoing the review process.
The FTC and DOJ review over a thousand merger filings every year.
Yet 95 percent of those merger filings present no competitive issues
or challenged transactions.
As reported by the American Antitrust Institute (AAI), the overall
concerns purported by the bill's sponsors are simply without
foundation.
In contrast, the overall work of the FTC has an incredible impact on
American consumers, communities and corporations and will be severely
impacted if disrupted.
As highlighted by the FTC Chairwoman Edith Ramirez in her testimony
before the House Judiciary Subcommittee on Regulatory Reform,
Commercial and Antitrust Law, the FTC prioritizes the protection of
consumers and the prevention of anticompetitive market practices.
In fact, the FTC exists to ensure fair competition and to prevent
enormous concentrations of economic power that hurts consumers and
small businesses.
For example:
In the past year, the FTC has challenged over 28 mergers, (although
in most it was able to negotiate a remedy to allow the merger to
proceed).
At the consumer level in my home state of Texas, the FTC secured an
$82,000 settlement against an auto-dealer found in violation of the
Fair Credit Reporting Act in September 2017.
Also last year, the FTC ordered the largest divestiture ever in a
supermarket merger, requiring Albertsons and Safeway to sell 168
supermarkets in 130 local markets throughout several states, ensuring
that communities continue to benefit from competition among their local
supermarkets.
The FTC has also taken an aggressive stance on stopping
anticompetitive mergers and conduct in the healthcare market by halting
such practices through administrative litigation.
In September 2017, the FTC secured a $1.1 million settlement to
consumers who lost money to a health insurance telemarketing scam.
And in the last two years, the FTC took action in 13 pharmaceutical
mergers, ordering divestitures to preserve competition for drugs that
treat diabetes, hypertension, and cancer, as well as widely used
generic medications like oral contraceptives and antibiotics.
Last year, on March 18, 2016, after a thoroughly vetted
investigation, the FTC approved a final order preserving competition
among outpatient dialysis clinics in Laredo, Texas.
That is, the FTC cleared U.S. Renal Care, Inc.'s (the country's third
largest outpatient dialysis provider) $640 million purchase of dialysis
competitor DSI Renal, on the condition that three of DSI's outpatient
clinics in Laredo, Texas be handed over to a third party.
Absent this agreed divestiture, the acquisition would have led to a
significant increase in market concentration and anti-competitive
effects.
The likely result, according to the FTC, would have included the
elimination of direct competition between U.S. Renal Care and DSI
Renal, reduced incentives to improve services
[[Page H3855]]
or quality for dialysis patients, and increased ability for the merged
company to unilaterally increase prices.
Notably, the DOJ has also been successful in securing investigations
and halting suspected harmful merger practices on a much larger scale
(in the health care and airline industry as of late).
In June 2016, the DOJ put pressure on several multibillion dollar
health insurers seeking to engage in large merger transactions with
near certain suppression of market competition in the healthcare
industry.
In August 2016, the DOJ issued civil investigative demands on several
major US airlines seeking to halt any potential unlawful mergers.
These cases demonstrate the need for continued protection of the FTC
and its ability to effectively carry out injunctions on harmful merger
and acquisition activities, as well as, anticompetitive business
conduct that harms consumers and restrains market activity.
The ability of the FTC to function independently is necessary to the
success of both the FTC and DOJ.
The far-reaching and elusive SMARTER Act fails to keep the
foundational integrity of these agencies and should be opposed.
I urge my colleagues to vote against this serious threat to our
fundamental protections of consumers and fair economic competition.
The SPEAKER pro tempore (Mr. Duncan of Tennessee). All time for
debate on the bill has expired.
Amendment No. 1 Printed in House Report 115-664 Offered by Mr.
Goodlatte
Mr. GOODLATTE. Mr. Speaker, I have an amendment at the desk.
The SPEAKER pro tempore. The Clerk will designate the amendment.
The text of the amendment is as follows:
Page 2, line 9, strike ``7'' and insert ``15''.
Page 3, strike lines 2 through 10, and insert the
following:
(A) in subsection (a) by inserting ``or a proceeding
brought by the Federal Trade Commission under section 15''
after ``United States under the antitrust laws''; and
(B) in subsection (i) by inserting ``or a proceeding
instituted by the Federal Trade Commission under section 15''
after ``antitrust laws'';
Page 3, strike lines 11 through 22, and insert the
following:
(3) Section 11 of the Clayton Act (15 U.S.C. 21) is
amended--
(A) in subsection (b) by striking ``Whenever'' and
inserting ``Except as provided in subsection (m), whenever'',
and
(B) by adding at the end the following:
``(m) The Federal Trade Commission may not use the
procedures for administrative adjudication set forth in
subsection (b) of this section to prevent the consummation of
a proposed merger, acquisition, joint venture, or similar
transaction that is subject to section 7, unless the
complaint is accompanied by a consent agreement between the
Commission and a party to the transaction that resolves all
the violations alleged in the complaint. The Federal Trade
Commission may institute proceedings in a district court
under section 15 to prevent the consummation of such a
transaction. In any such proceeding the district court shall
apply the same standard for granting injunctive relieve as
applicable to a proceeding brought by the United States
attorneys under section 15. The Federal Trade Commission may
issue an administrative complaint under this section if the
complaint is accompanied by a consent agreement between the
Federal Trade Commission and a party to the transaction
settling the alleged violations.'';
Page 3, line 23, strike ``(including'' and insert ``or''.
Page 4. beginning on line 1, strike ``with respect to a
violation of section 7)'' and insert ``under section 15''.
Page 4, strike lines 3 through 5, and insert the following:
(5) in section 15, by inserting ``and the duty of the
Federal Trade Commission with respect to the consummation of
a proposed merger, acquisition, joint venture, or similar
transaction that is subject to section 7 and not yet
consummated,'' after ``General''.
Page 5, strike lines 12 through 14, and insert the
following:
(4) in section 16(a)(2)--
(A) in subparagraph (D) by striking ``or'' at the end,
(B) in subparagraph (E) by adding ``or'' at the end, and
(C) by adding at the end the following:
``(F) under section 15 of the Clayton Act (15 U.S.C.
25);''.
The SPEAKER pro tempore. Pursuant to House Resolution 872, the
gentleman from Virginia (Mr. Goodlatte) and a Member opposed each will
control 5 minutes.
The Chair recognizes the gentleman from Virginia.
Mr. GOODLATTE. Mr. Speaker, this amendment makes a series of useful
technical and clarifying changes suggested by the Federal Trade
Commission.
At the FTC's request, the amendment adds language stating explicitly
that the agency retains independent litigating authority in merger
cases brought under the Clayton Act. This makes clear that the FTC is
not forced to rely on the Department of Justice in these cases.
The amendment also strikes language referring to the FTC's authority
to issue civil investigative demands in merger cases. This is because
the reference is unnecessary and could create a negative inference that
the FTC does not enjoy such authority in other contexts.
The amendment makes further technical improvements in several places
in the bill that refer to the FTC bringing an action under section 7 of
the Clayton Act. The FTC's authority to bring an action in court
actually derives from section 15 of the act, so the amendment updates
that citation.
Furthermore, the amendment changes the phrase ``including'' FTC
proceedings to ``or'' FTC proceedings in several places in the
underlying bill. This is to underscore that FTC settlements are
distinct from DOJ antitrust settlements and, thus, are not subject to
the judicial review provisions of the Tunney Act.
The amendment also refines language in the underlying bill that
ensures the same legal standards are applied to FTC and DOJ
injunctions, and that preserves FTC authority to use administrative
adjudication as part of a settlement agreement.
Specifically, the changes more clearly define the circumstances in
which the FTC may seek an injunction and more clearly state that the
FTC must proceed in Federal court, not administratively. The amended
language also more accurately reflects the FTC's practices for
administrative settlements, more clearly states that the district
courts must apply the same standard in those cases as it would apply
when the Department of Justice seeks injunctions, and more clearly
provides that the new rules change only administrative adjudications,
not investigative procedures.
Finally, the amendment clarifies that the FTC's duty to use the
courts, rather than administrative procedures, to block anticompetitive
behavior, extends only to the merger-type actions that this bill is
intended to cover.
Again, these changes are of a technical nature and were all
recommended by the FTC itself. Accordingly, I urge my colleagues to
support this amendment.
Mr. Speaker, I reserve the balance of my time.
Mr. NADLER. Mr. Speaker, I claim the time in opposition to the
gentleman's amendment.
The SPEAKER pro tempore. The gentleman from New York is recognized
for 5 minutes.
Mr. NADLER. Mr. Speaker, I yield myself such time as I may consume.
This amendment makes several technical revisions to clarify that the
bill does not apply to consummated mergers and other transactions.
While this change marginally addresses one concern with the bill, it
does nothing to change the most fundamental flaw with the bill, which
is that it eliminates the Federal Trade Commission's administrative
litigation authority in merger cases.
As we noted during consideration of this bill in the Judiciary
Committee last year, and in prior Congresses, the SMARTER Act is
overbroad as currently drafted and applies to both unconsummated and
consummated transactions.
According to John Jacobson, a leading antitrust attorney, who served
as commissioner of the Antitrust Modernization Commission, this bill
could easily be ``construed as prohibiting a challenge to the
consummation of any merger in administrative proceedings, even a post-
merger challenge, notwithstanding the term `proposed.' ''
Technical feedback by senior staff at the FTC, under both Democratic
and Republican administrations, confirmed this view.
While the amendment makes the useful clarification that H.R. 5645
would not apply to already consummated transactions, the bill would
still eliminate the FTC's ability to use administrative litigation in
proposed mergers, striking at the core of the Commission's independence
and congressionally mandated design, without any evidence that such a
change is warranted or desirable.
As Mr. Jacobson has also noted in his testimony in opposition to a
similar
[[Page H3856]]
version of this legislation considered by the Senate, eliminating the
``FTC's ability to conduct administrative proceedings in pre-
consummation merger challenges is harmful to the sound administration
of the antitrust laws.''
At a time when there is an increasing desire across the ideological
spectrum to strengthen antitrust enforcement in the face of extreme
concentrations of corporate power in industry after industry, the
SMARTER Act proposes to go in the opposite direction. Congress was wise
to establish an independent agency in 1914 to ensure strong antitrust
enforcement, and we would be wise today not to undermine that choice.
Mr. Speaker, this amendment essentially puts lipstick on a pig. It
does not change my basic opposition to a bill that is fundamentally
flawed in its conception. Therefore, I must oppose this amendment, and
I reserve the balance of my time.
Mr. GOODLATTE. Mr. Speaker, I continue to reserve the balance of my
time.
Mr. NADLER. Mr. Speaker, I yield myself the balance of the time.
Mr. Speaker, as a practical matter, the FTC only challenges a handful
of proposed mergers, on average, per year. These transactions present
some of the largest, most complex, and potentially most concerning
issues. But in most of these cases, the parties either abandon the
transaction or negotiate a settlement.
Nonetheless, in those few instances where the FTC does challenge a
transaction, it is in a position to answer novel questions of law and,
thereby, develop expertise and guidance for future applications.
Indeed, that is the whole point of having an FTC, and that is the whole
point of administrative adjudication authority.
As the Antitrust Institute has noted in its opposition to the SMARTER
Act to this bill, ``the FTC's use of administrative powers should be
carefully safeguarded, because it has contributed critically to the
effective shaping of U.S. merger policy without detracting from the
speed or effectiveness of merger review.''
{time} 1415
In addition, Republican FTC Commissioner Maureen Ohlhausen's 2016
study on administrative litigation debunks the claim of procedural bias
against merging parties. Her study found that the FTC's appellate
success and case work ``do not support a narrative that the Commission
blindly supports ill-conceived cases because of systemic bias. To the
contrary, they show a recent history of solid, well-supported
enforcement actions.''
Even where the FTC does not use administrative adjudication, the
potential use of this tool is invaluable in the agency's ability to
successfully get emerging parties to agree to structural remedies, such
as divestitures, to address concerns with a proposed merger.
It is unthinkable to remove the FTC's administrative litigation
authority, as this amendment would continue to do, when such authority
is only used to protect against the most anticompetitive mergers that
are certain to substantially lessen competition, harm consumers, raise
prices, and hurt workers.
For these reasons, I urge my colleagues to oppose this amendment.
Mr. Speaker, I yield back the balance of my time.
Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may
consume.
The arguments we have heard against this bill are without merit.
It has charged that the SMARTER Act would make it more difficult for
the FTC to fulfill its consumer protection mandate. This is incorrect.
The FTC's consumer protection powers are completely independent from
the antitrust laws. The SMARTER Act deals only with the antitrust
piece, so, by its terms, does not impact the FTC's ability to prosecute
``unfair or deceptive acts or practices.''
As for harm to consumers from proposed mergers, the SMARTER Act does
not, in any way, affect substantive antitrust law; it does not amend,
in any form or fashion, section 7 of the Clayton Antitrust Act or any
of the FTC's consumer protection powers.
Opponents also claim that the SMARTER Act removes an important tool
from the FTC by eliminating its ability to pursue administrative
litigation. This, too, is a red herring.
The SMARTER Act only removes the FTC's administrative litigation
authority in the very narrow context of proposed transactions. A report
from the bipartisan Antitrust Modernization Commission determined that
any benefit from such authority was marginal and ``significantly
outweighed by the costs.''
The FTC can still pursue administrative litigation in conduct cases
and in actions against consummated mergers. Indeed, the AMC report
stated specifically that: ``Elimination of administrative litigation in
. . . merger''--review--``cases will not deprive the FTC of an
important enforcement option.''
Opponents also charge that enacting the SMARTER Act will make it more
difficult for the antitrust enforcement agencies to stop a merger, but
the SMARTER Act only changes the process; it does not have any
substantive impact on merger reviews.
But don't take my word for it. A letter from 15 leading antitrust
professors states: ``The SMARTER Act does nothing to undermine the
FTC's authority; it simply ensures that the merger review processes and
standards are equally applied to merger parties regardless of which
agency reviews the transaction.''
But perhaps the most ironic argument brought against the bill is that
it is unnecessary because the FTC rarely initiates administrative
litigation after a court denies a preliminary injunction request.
Administrative adjudications may be rare, not because regulators use
the powers sparingly, but because the mere prospect of this protracted,
costly process may prompt companies to abandon the merger even though
they prevailed in court. That hardly seems fair.
Parties to a merger should receive the same treatment and have the
same process regardless of the reviewing antitrust agency, and the
SMARTER Act accomplishes that goal.
This legislation will help America continue to serve as a leader and
innovator in competition law, and I urge my colleagues to support it.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Pursuant to the rule, the previous question
is ordered on the bill and on the amendment offered by the gentleman
from Virginia (Mr. Goodlatte).
The question is on the amendment offered by the gentleman from
Virginia (Mr. Goodlatte).
The amendment was agreed to.
The SPEAKER pro tempore. The question is on the engrossment and third
reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit
Mr. DOGGETT. Mr. Speaker, I have a motion to recommit at the desk.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. DOGGETT. Strongly.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Doggett moves to recommit the bill (H.R. 5645) to the
Committee on the Judiciary, with instructions to report the
bill back to the House forthwith with the following
amendment:
At the end of the bill, add the following:
SEC. 5. PROTECTING CONSUMERS AGAINST HIGH PRESCRIPTION DRUG
COSTS.
Notwithstanding any other provision of this Act--
(1) the amendments made by this Act shall not apply to
mergers that would unreasonably increase the costs of
pharmaceutical drugs; and
(2) the Clayton Act (15 U.S.C.12 et seq.) and Federal Trade
Commission Act (15 U.S.C. 45 et seq.) as in effect
immediately before the date of the enactment of this Act
shall apply to mergers that would unreasonably increase the
costs of pharmaceutical drugs.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Texas is recognized for 5 minutes in support of his motion.
Mr. DOGGETT. Mr. Speaker, I offer this motion to recommit because
Republicans have been motionless when it comes to acting on the
spiraling drug prices that are harming so many Americans.
The willingness of this Congress to sit on its hands, stand idle in
the face of the prescription price gouging that so many of our
neighbors face, is nothing short of appalling, and there is
[[Page H3857]]
nothing ``smarter'' in this bill about dealing with that terrible
problem.
Of course, President Trump has told us it is going to be
``beautiful,'' but every time you turn around, he is cozying up with
some pharmaceutical lobbyists that are raising prices and putting some
of their people in charge of his drug agenda.
All that this motion does is to take the very modest step of reducing
the possibility that, through further mergers of drug companies, we
will see the sick and dying extorted even more than they are today with
skyrocketing prices that are made even worse when these mergers occur.
If this motion passes, it won't kill the bill or slow it down a
moment.
What it will do is to give life to an effort to contain these mergers
and see that prescription prices don't soar even further. Yes, it is
not the principal issue on drug prices. Unfortunately, there is no
wonder drug to stop prescription price gouging, but this is one of the
only ways to get the issue to the floor of this House because our
Republican colleagues in every committee are determined to remain
silent and see no action whatsoever.
I continue to hear from my neighbors back in Texas who care about
this a lot more than my Republican colleagues. They tell me they cannot
afford their prescriptions or they are burdened with immense debt to do
it.
I think of Elaine in San Antonio, who has suffered with glaucoma for
a number of years. She is fighting to save her eyesight, but now her
copays on three different necessary drops are costing $400, $227, $178
per month. She says she wants to finish her senior years in dignity but
is burdened down by these outrageous prices.
The choice should not be blindness or rent for a senior who has
worked and saved all their lifetime.
Even in the face of the opioid epidemic, where we are about to hear
about a whole lot of bills on the floor that don't do a whole lot, but
in the face of that crisis, a devastating national public health
emergency, the price of naloxone, a lifesaving overdose reversal drug,
has been spiked by almost 600 percent.
Even an effective drug is 100 percent ineffective when it is
unaffordable.
Too many drugs are ineffective for too many people because drug
prices have soared at a rate of ten times the rate of inflation. But
where some see a crisis like that, others see a revenue opportunity.
Brand name pharmaceutical manufacturers rely upon government-approved
monopolies to charge monopoly prices, whatever they can get out of the
sick and dying. They utilize as many maneuvers as possible to
perpetuate their monopolies as long as possible while pouring their
money, not into research and development of new drugs, but into
lobbying this Congress and the administration.
Drug manufacturers spent $171 million last year in Federal lobbying,
more than insurance, oil and gas, electronics, or any other industries.
They had more lobbyists than we had Members of Congress. In fact, they
could have a two-on-one defense to assure that this Congress is quiet,
it is inactive, it is unresponsive to people.
Let's pass this motion and ensure that when the pharmaceutical
companies use the $80 billion tax windfall, that they were just
rewarded by the Republicans to pay for more mergers, that consumers
don't get caught in the middle and see their prices spike even further.
We need to commit ourselves to action by approving this motion to
recommit, to commit ourselves to putting consumers first over Big
Pharma.
Mr. Speaker, I yield back the balance of my time.
Mr. GOODLATTE. Mr. Speaker, I claim the time in opposition to the
motion.
The SPEAKER pro tempore. The gentleman from Virginia is recognized
for 5 minutes.
Mr. GOODLATTE. Mr. Speaker, this motion is unnecessary because this
bill does nothing to undermine substantive antitrust enforcement. It
might even hold up mergers that the court already found procompetitive
and could help lower drug prices.
This is simply a dilatory tactic used by my friends on the other side
of the aisle to hold up this important legislation.
For decades, American antitrust laws have been a shining example of
how to protect against anticompetitive activities in a consistent,
predictable, and fair manner.
Other countries have looked to our laws as the template for the
creation of their own competition laws. Let us continue to be a model
of proper antitrust enforcement.
The SMARTER Act is a commonsense process reform that ensures fairness
and parity in the narrow field of merger reviews. The bill was
recommended to Congress by a bipartisan commission and is supported by
former top antitrust enforcement officials and past and present FTC
Commissioners of both political parties.
Mr. Speaker, accordingly, I urge my colleagues to do the smart thing
by opposing this bill and supporting the underlying bill.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Kustoff of Tennessee). Without
objection, the previous question is ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. DOGGETT. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
____________________