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[House Report 113-658]
[From the U.S. Government Publishing Office]

113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     113-658

======================================================================

 
STANDARD MERGER AND ACQUISITION REVIEWS THROUGH EQUAL RULES ACT OF 2014

                                _______
                                

 December 11, 2014.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

          Mr. Goodlatte, from the Committee on the Judiciary, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 5402]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 5402) 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, having considered 
the same, report favorably thereon without amendment and 
recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     6
Committee Oversight Findings.....................................     6
New Budget Authority and Tax Expenditures........................     6
Congressional Budget Office Cost Estimate........................     6
Duplication of Federal Programs..................................     7
Disclosure of Directed Rule Makings..............................     8
Performance Goals and Objectives.................................     8
Advisory on Earmarks.............................................     8
Section-by-Section Analysis......................................     8
Changes in Existing Law Made by the Bill, as Reported............    10
Dissenting Views.................................................    17

                          Purpose and Summary

    H.R. 5402, the ``Standard Merger and Acquisition Reviews 
Through Equal Rules Act of 2014,'' or the ``SMARTER Act,'' 
harmonizes the standards applied to the Department of Justice 
(DOJ) and the Federal Trade Commission (FTC) when each agency 
seeks a preliminary injunction to a proposed merger or 
acquisition. Additionally, the SMARTER Act amends the Clayton 
Act to provide the FTC with the same authority DOJ already 
possesses to seek an injunction against a proposed merger, and, 
in doing so, removes the ability of the FTC to pursue internal 
administrative litigation following a court's denial of an FTC 
preliminary injunction request. The SMARTER Act would preserve 
each agency's authority to challenge monopolistic transactions 
or ones that would substantially lessen competition.

                Background and Need for the Legislation

   A. BRIEF OVERVIEW OF ANTITRUST ENFORCEMENT BY DOJ AND THE FTC OF 
                   PROPOSED MERGERS AND ACQUISITIONS

    Two Federal agencies, the Antitrust Division of DOJ and the 
FTC, share responsibility for government enforcement of the 
Federal antitrust laws.\1\ The position of Assistant Attorney 
General for Antitrust was created at DOJ in 1903, and the 
Antitrust Division became a separate operating unit within DOJ 
30 years later.\2\ In 1914, Congress passed the Federal Trade 
Commission Act (the FTC Act),\3\ which created the FTC and 
conferred to the independent agency antitrust enforcement 
authority that would, in part, supplement DOJ's antitrust 
enforcement authority.
---------------------------------------------------------------------------
    \1\Antitrust Modernization Commission, Report and Recommendations, 
at 129 (Apr. 2007), available at http://govinfo.library.unt.edu/amc/
report_recommendation/amc_final_
report.pdf [hereinafter, the ``AMC Report''].
    \2\Id.
    \3\15 U.S.C. Sec. Sec. 41-58 (1914).
---------------------------------------------------------------------------
    Section 7 of the Clayton Act (Section 7) prohibits mergers 
and acquisitions that would ``substantially lessen 
competition'' or ``tend to create a monopoly.''\4\ The 
Antitrust Division and the FTC have essentially identical 
authority to enforce Section 7. The manner in which they review 
proposed transactions and enforce their Section 7 authority 
largely is prescribed by the Hart-Scott-Rodino Antitrust 
Improvements Act (the HSR Act).\5\ Under the HSR Act, each of 
the antitrust enforcement agencies is notified in advance of a 
proposed transaction and afforded a period of time to review 
the effects of such a transaction.\6\ Only one agency takes 
responsibility for the review of a proposed transaction.\7\ For 
the vast majority of transactions, the antitrust enforcement 
agencies will grant an early termination of the statutory 
waiting period or simply allow the waiting period to expire 
without taking any formal action, both of which have the effect 
of allowing the transaction to proceed to consummation.
---------------------------------------------------------------------------
    \4\15 U.S.C. Sec. 18 (2013).
    \5\15 U.S.C. Sec. 18a (2013), as amended.
    \6\As a practical matter, virtually every transaction includes a 
period of time between the execution of the initial transaction 
documents that outline the intent of parties to enter into a deal and 
the manner in which they intend to consummate the deal, and the 
``closing'' of the transaction when the deal is consummated. Depending 
on the size and complexity of the transaction, that period of time 
could be anywhere between a matter of weeks to over a year.
    \7\AMC Report, at 132 (2007) (explaining that there is not a 
governing document or policy that determines which agency reviews each 
proposed transaction; however, there are some historical practices that 
can influence which agency reviews the transaction. For example, DOJ 
typically reviews telecommunications transactions and the FTC typically 
reviews health care transactions. These historical practices, however, 
are not hard and fast rules and are not always followed.).
---------------------------------------------------------------------------
    When the antitrust enforcement agencies conclude that the 
consummation of a proposed transaction would violate Section 7, 
the agencies pursue an injunction of the transaction in Federal 
court. Generally speaking, if the court grants the injunction, 
the parties abandon the merger; if the court denies the 
injunction, the parties consummate the transaction shortly 
thereafter.

             B. DISPARATE PRELIMINARY INJUNCTION STANDARDS

    The FTC and DOJ confront different standards when seeking a 
preliminary injunction of a proposed transaction in court. When 
reviewing the FTC's request for a preliminary injunction, 
courts apply the standard explicitly set forth in Section 13(b) 
of the FTC Act, which states that ``[u]pon a proper showing 
that, weighing the equities and considering the Commission's 
likelihood of ultimate success, such action would be in the 
public interest, and after notice to the defendant, a temporary 
restraining order or a preliminary injunction may be granted 
without bond.''\8\ By comparison, Section 15 of the Clayton 
Act, pursuant to which DOJ seeks injunctions, does not specify 
a standard of review for courts when they determine whether to 
grant preliminary injunctive relief. Consequently, DOJ must 
meet the traditional preliminary injunction standard as applied 
by the presiding Circuit Court, which generally requires ``a 
reasonable likelihood of success on the merits'' and ``the 
balance of equities'' favoring DOJ.\9\
---------------------------------------------------------------------------
    \8\15 U.S.C. Sec. 53(b) (2013).
    \9\See, e.g., United States v. Siemens Corp., 621 F.2d 499, 505-06 
(2d Cir. 1980) (citations omitted). Although courts generally also 
require a showing of irreparable injury or substantial harm to the 
public to grant a preliminary injunction, many courts have held that 
irreparable harm to the public should be presumed once the government 
establishes a reasonable probability of success. See, e.g., id. at 506. 
See also the American Bar Association, Section of Antitrust Law, Public 
Comments Submitted to the Antitrust Modernization Commission Regarding 
Differential Merger Enforcement Standards, at 3 (Oct. 28, 2005).
---------------------------------------------------------------------------
    These disparate preliminary injunction standards can yield 
different results. Some commentators go so far as to suggest 
that the FTC may even be subject to a more lenient standard 
than DOJ.\10\
---------------------------------------------------------------------------
    \10\AMC Report, at 142 (2007). But see AMC Report at 142 n.90 
statement of William Blumenthal (stating that the perception 
continually changes, and that it is not invariably the case that people 
would rather be before the DOJ).
---------------------------------------------------------------------------

        C. DISPARATE PROCESSES TO PREVENT A PROPOSED TRANSACTION

    Generally, DOJ agrees with the transaction parties to 
combine the proceedings for both a preliminary injunction and 
permanent injunction before the district court.\11\ In 
contrast, the FTC's practice is to seek only a preliminary 
injunction, despite the fact that they have the authority to 
consolidate the proceedings in the same fashion as DOJ. In 
fact, the FTC has affirmatively fought against efforts to 
consolidate the preliminary injunction and permanent injunction 
proceedings.\12\
---------------------------------------------------------------------------
    \11\AMC Report, at 138 (2007).
    \12\See Pl. FTC's Mem. in Opp'n to Defs.' Mot. Seeking 
Consolidation of Prelim. & Permanent Injs., FTC v. Arch Coal, Inc., 
Case No. 1:04-CV-00534, at 3, 4 (Apr. 22, 2004) (arguing against 
consolidation).
---------------------------------------------------------------------------
    One of the primary reasons that the FTC's practice to 
pursue only a preliminary injunction is it preserves the FTC's 
ability to pursue administrative litigation following the 
denial of a preliminary injunction request. The FTC may pursue 
an administrative hearing after the denial of a preliminary 
injunction if, on a case-by-case basis, it determines that 
administrative litigation would serve the public interest.\13\ 
In contrast, the DOJ does not have the authority to conduct 
administrative litigation.
---------------------------------------------------------------------------
    \13\Administrative Litigation Following the Denial of a Preliminary 
Injunction: Policy Statement, 60 Fed. Reg. 39,741 (1995).
---------------------------------------------------------------------------

             D. THE ANTITRUST MODERNIZATION COMMISSION AND 
                          ITS RECOMMENDATIONS

    In early 2003, the bi-partisan Antitrust Modernization 
Commission (the AMC) was formed pursuant to the Antitrust 
Modernization Act.\14\ The AMC was charged with examining the 
antitrust laws, soliciting the opinions of experts on the 
operation of such laws, and publishing a report with the AMC's 
recommendations for any improvements to the antitrust laws. On 
April 2, 2007, the AMC issued a 540-page report that detailed 
the issues it examined and provided a number of recommendations 
for legislative, administrative, and judicial action.
---------------------------------------------------------------------------
    \14\Antitrust Modernization Commission Act of 2002, Pub. L. No. 
107-273, Sec. 11054(h), 116 Stat. 1856, 1857.
---------------------------------------------------------------------------
    Included in the AMC report was an examination of the issues 
attendant to the existing disparities in the preliminary 
injunction standards applied to DOJ and the FTC, and the 
disparate processes available to DOJ and the FTC when each 
agency seeks to prevent a proposed transaction. As stated 
within the AMC report:

        Parties to a proposed merger should receive comparable 
        treatment and face similar burdens regardless of 
        whether the FTC or the DOJ reviews their merger. A 
        divergence undermines the public's trust that the 
        antitrust agencies will review transactions efficiently 
        and fairly. More important, it creates the impression 
        that the ultimate decision as to whether a merger may 
        proceed depends in substantial part on which agency 
        reviews the transaction.\15\
---------------------------------------------------------------------------
    \15\AMC Report, at 138-9 (2007). The importance of removing any 
potential divergence is underscored by the fact that it often is mere 
chance or, the ``flip of a coin,'' that determines which agency reviews 
the proposed transaction.

The AMC report further explains that even the perception of a 
difference between the standards applied to, and processes used 
by, the agencies could impact how parties interact with the 
agencies. For example, the FTC may be perceived as having 
greater leverage when negotiating a consensual consent decree 
with the proposed transaction parties.\16\ Again, ``just the 
perception that the applicable rules depend on the happenstance 
of which agency is reviewing the transaction can undermine 
confidence in the fairness of a dual merger enforcement 
regime.''\17\
---------------------------------------------------------------------------
    \16\AMC Report, at 142 (2007).
    \17\Id.
---------------------------------------------------------------------------

                           E. THE SMARTER ACT

    The SMARTER Act incorporates a number of the 
recommendations made by the AMC, and provides the antitrust 
enforcement agencies with consistent authority and processes 
when seeking to prevent a proposed transaction. Specifically, 
the SMARTER Act confers to the FTC the same authority that DOJ 
presently possesses under the Clayton Act. In doing so, the 
SMARTER Act also requires the FTC to petition the district 
court to seek an injunction of a proposed transaction rather 
than using an internal administrative process. The FTC will 
retain administrative litigation capabilities in other 
contexts. As the AMC report highlights:

        Elimination of administrative litigation in HSR Act 
        merger cases will not deprive the FTC of an important 
        enforcement option. Although administrative litigation 
        may provide a valuable avenue to develop antitrust law 
        in general, it appears unlikely to add significant 
        value beyond that developed in Federal court 
        proceedings for injunctive relief in HSR Act merger 
        cases. Whatever the value, it is significantly 
        outweighed by the costs it imposes on merging parties 
        in uncertainty and litigation costs.\18\
---------------------------------------------------------------------------
    \18\AMC Report, at 141 (2007) (citations omitted).

Accordingly, under the SMARTER Act, both DOJ and the FTC remain 
able to pursue both preliminary and permanent injunctions, and 
the standards applied by courts to both agencies will be 
identical. Consequently, while there will continue to be a dual 
antitrust enforcement regime, the standards and processes 
applied to parties who undergo a transaction review will be 
harmonized.

                                Hearings

    On April 3, 2014, the Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law conducted a hearing on a 
discussion draft of the SMARTER Act. The witnesses at the 
hearing were: Deborah Garza, Esq., Partner, Covington & Burling 
LLP, former Chairwoman of the Antitrust Modernization 
Commission, former Acting Assistant Attorney General of the 
Department of Justice; Richard Parker, Esq., Partner, O'Melveny 
& Myers LLP, former Director of the Bureau of Competition of 
the Federal Trade Commission; Abbott (Tad) B. Lipsky, Jr., 
Esq., Partner, Latham & Watkins LLP, former Deputy Assistant to 
the Assistant Attorney General of the Department of Justice; 
and Professor John B. Kirkwood, Seattle University School of 
Law.
    All four witnesses, including the Minority witness, 
testified in support of the same preliminary injunction 
standard being applied to both antitrust enforcement agencies. 
Additionally, three of the four witnesses testified in support 
of removing the FTC's ability to pursue administrative 
litigation solely in the context of merger reviews. These 
witnesses testified that such a change would promote 
transparency, fairness, and predictability to the merger review 
process as well as allow the United States to continue its 
leadership role in global antitrust enforcement policy.

                        Committee Consideration

    On September 10, 2014, the Committee met in open session 
and ordered the bill, H.R. 5402, favorably reported without 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 5402.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 5402, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 6, 2014.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5402, the 
``Standard Merger and Acquisition Reviews Through Equal Rules 
Act of 2014.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie, 
who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member

H.R. 5402--Standard Merger and Acquisition Reviews Through Equal Rules 
                              Act of 2014.

      As ordered reported by the House Committee on the Judiciary 
                         on September 10, 2014.

    CBO estimates that implementing H.R. 5402 would not 
significantly affect discretionary spending. Enacting H.R. 5402 
would not affect direct spending or revenues; therefore, pay-
as-you-go procedures do not apply.
    Under current law, both the Federal Trade Commission (FTC) 
and the Department of Justice (DOJ) enforce Federal antitrust 
laws, though in some instances, the manner in which that 
authority is exercised is different in the two agencies. H.R. 
5402 would amend the Clayton Act and the Federal Trade 
Commission Act to align certain procedures followed by the FTC 
to review a proposed merger or acquisition with those followed 
by DOJ.
    Specifically, the bill would:

         LHarmonize the standard each agency must meet 
        before a Federal court can issue a preliminary 
        injunction against a proposed transaction;

         LDirect the FTC to resolve a contested merger 
        or acquisition through a Federal court rather than 
        through administrative litigation; and

         LIn cases where the FTC and the parties reach 
        an agreement that allows the merger or acquisition to 
        proceed, require the agency to submit the agreement to 
        the Federal court for its approval.

    CBO expects that the FTC's efforts to prepare for and 
litigate a contested merger in Federal court using the new 
standard specified in H.R. 5402 would not require a significant 
increase in staffing levels. Over the past 5 years, the FTC has 
filed 6 preliminary injunctions in Federal court. Based on 
information from the agency, CBO expects that volume to remain 
relatively constant over the next 5 years.
    Similarly, the FTC approved, on average, fewer than 15 
agreements related to proposed mergers over each of the past 5 
years. Under H.R. 5402, those agreements would be considered by 
the Federal courts rather than the FTC under similar, though 
not identical, procedures. Taking into account the small number 
of agreements sought each year and the fact that the FTC 
follows procedures similar to those required in H.R. 5402, we 
estimate the increased workloads resulting from the new 
requirement would have an insignificant effect on the FTC's 
staffing levels and on the workload of the Federal courts.
    H.R. 5402 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Susan Willie. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 5402 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from GAO to Congress pursuant to section 21 of Public 
Law 111-139, or a program related to a program identified in 
the most recent Catalog of Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 5402 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
5402 amends the Clayton Act and the Federal Trade Commission 
Act to provide the Federal Trade Commission with the same 
authority as the Department of Justice with respect to mergers 
under the Clayton Act.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 5402 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f) or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
Section 1. Short Title.
    Sets forth the short title of the legislation as the 
``Standard Merger and Acquisition Reviews Through Equal Rules 
Act of 2014.''
Section 2. Amendments to the Clayton Act.
    Subsection 2(1) amends Section 4F of the Clayton Act, which 
provides that the Attorney General must notify state attorneys 
general of any antitrust action in which he or she believes the 
state could bring an action based on substantially similar 
facts, and share related files with such state attorneys 
general. The SMARTER Act amends this section to subject the FTC 
to these same requirements.
    Subsection 2(2)(A) amends section 5(a) of the Clayton Act, 
which provides that, in cases brought by the United States that 
result in final judgments against a defendant, those judgments 
can be used as prima facie evidence (i.e., unless rebutted, 
sufficient to prove the allegation) of antitrust violations 
under substantially similar facts brought by other parties. The 
SMARTER Act amends this section to clarify that actions brought 
by the United States include actions brought by the FTC under 
Section 7.
    Subsection 2(2)(B) amends section 5(b) of the Clayton Act, 
which provides that the United States, in civil actions to 
which the United States is a party, must publish proposed 
consent orders, and comments to such orders, in the Federal 
Register along with ``competitive impact statements'' that 
generally describe the nature of the actions, the violations 
and the proposed consent judgments. The SMARTER Act amends this 
section to clarify that the FTC is also subject to these same 
requirements for cases brought under Section 7.
    Subsection 2(2)(C) amends section 5(c) of the Clayton Act, 
which provides that the United States must publish in 
newspapers in general circulation in the district in which a 
case is filed, in the District of Columbia, and in other 
districts that the presiding court may direct, a summary of the 
proposed consent judgment, the related competitive impact 
statement, and a list of materials that the United States will 
make available for public inspection. The SMARTER Act amends 
this section to clarify that the FTC is also subject to these 
same requirements for cases brought under Section 7.
    Subsection 2(2)(D) amends section 5(d) of the Clayton Act, 
which provides that the Attorney General must consider comments 
submitted by the public to a consent judgment and file a 
response to such comments in the Federal Register (or in 
another manner as the presiding court may prescribe). The 
SMARTER Act amends this section to clarify that the FTC is also 
subject to these same requirements for cases brought under 
Section 7 of the Clayton Act.
    Subsection 2(2)(E) amends section 5(e) of the Clayton Act, 
which provides certain factors that a court must consider when 
approving a proposed consent judgment submitted by the United 
States. The SMARTER Act amends this section to clarify that the 
term United States includes the FTC.
    Subsection (2)(2)(F) amends section 5(f) of the Clayton 
Act, which provides a reviewing court certain tools when 
considering a proposed consent judgment, including allowing it 
to review the comments submitted to the United States as part 
of the required publication process. The SMARTER Act amends 
this section to clarify that the term United States includes 
the FTC.
    Subsection (2)(2)(G) amends section 5(g) of the Clayton 
Act, which requires a defendant in the action to submit a 
description of any communication it, or its agents, had with 
the Attorney General or DOJ employees relevant to a consent 
judgment, excluding communications by the defendant's counsel 
of record. The SMARTER Act amends this section to provide that 
the same requirement is applicable to communications with the 
FTC or its employees.
    Subsection (2)(2)(H) amends section 5(i) of the Clayton 
Act, which suspends the statute of limitations for private and 
state rights of action based on the conduct in question during 
a United States' proceeding and for 1 year thereafter, except 
that claims brought under section 4 or 4C of the Clayton Act 
only may be brought during the United States' proceeding or 
within 4 years after the cause of action accrued. The SMARTER 
Act amends this section to clarify that the statute of 
limitations is also tolled for actions brought by the FTC under 
Section 7.
    Subsection 2(3) amends section 11 of the Clayton Act, which 
authorizes the enforcement of compliance with certain sections 
of the Clayton Act by Federal agencies with specific expertise 
and provides for procedures for such enforcement. For example, 
section 11 authorizes the Federal Reserve Board to enforce 
compliance of these sections of the Clayton Act against banks, 
banking associations, and trust companies. The SMARTER Act 
excludes the FTC's enforcement of Section 7 from these separate 
procedures, which further ensures that the FTC's Section 7 
enforcement procedures will be identical to the procedures 
applicable to the Attorney General.
    Subsection 2(4) amends section 13 of the Clayton Act, which 
allows the United States to issues subpoenas that will be 
effective in any judicial district. The SMARTER Act amends this 
section to clarify that the term United States includes the FTC 
when it is prosecuting Section 7 cases.
    Subsection 2(5) amends section 15 of the Clayton Act, which 
provides that it is the duty of the United States district 
attorneys, under the direction of the Attorney General, to 
institute antitrust lawsuits and provides them with authority 
to seek temporary restraining orders or other remedies against 
the offensive conduct. The SMARTER Act amends this section to 
provide that the Clayton Act duties and authorities are also 
extended to the FTC.
Section 3. Amendments to the FTC Act.
    Subsection 3(1) amends section 5 of the FTC Act, which 
allows the FTC to initiate an administrative proceeding to 
evaluate an ``unfair method of competition,'' which could 
include a proposed merger. The SMARTER Act amends this section 
to exclude the initiation of such a proceeding on the basis of 
a merger review.
    Subsection 3(2) amends section 9 of the FTC Act, which 
provides jurisdiction to the Federal courts to issue writs of 
mandamus that command compliance with the FTC Act. The process 
for obtaining such a writ of mandamus requires the FTC to 
request the Attorney General to submit an application to the 
courts for the writ. The SMARTER Act amends this section to 
allow the FTC to submit independently an application to the 
courts for such a writ for merger review cases in which the FTC 
finds that the activity in question constitutes an ``unfair 
method of competition.''
    Subsection 3(3) amends section 13(b) of the FTC Act, which 
provides authority to the FTC to seek a preliminary injunction 
for a violation of the FTC Act. The SMARTER Act amends this 
section specifically to exclude the FTC from seeking a 
preliminary injunction in a case brought under Section 7 
because the FTC now has this authority separately under the 
Clayton Act.
Section 4. Effective Date; Application of Amendments.
    Subsection 4(a) provides that the effective date of the 
SMARTER Act will be the day that it is signed into law.
    Subsection 4(b) provides that the SMARTER Act will not 
apply to violations of Section 7 that occurred prior to the 
enactment of the SMARTER Act, transactions that are in 
compliance with Section 7A of the Clayton Act (i.e., 
transactions for which the parties have filed a Hart-Scott-
Rodino merger review notice), and consummated mergers.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                              CLAYTON ACT

           *       *       *       *       *       *       *
actions by attorney general of the united states  or the federal trade 
                               commission

    Sec. 4F. (a) Whenever the Attorney General of the United 
States (or the Federal Trade Commission with respect to a 
violation of section 7) has brought an action under the 
antitrust laws, and he (or it) 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, he (or it) shall promptly give 
written notification thereof to such State attorney general.
    (b) To assist a State attorney general in evaluating the 
notice or in bringing any action under this Act, the Attorney 
General of the United States (or the Federal Trade Commission 
with respect to a violation of section 7) shall, upon request 
by such State attorney general, make available to him, 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.

           *       *       *       *       *       *       *

    Sec. 5. (a) A final judgment or decree heretofore or 
hereafter rendered in any civil or criminal proceeding brought 
by or on behalf of the United States (including a proceeding 
brought by the Federal Trade Commission with respect to a 
violation of section 7) under the antitrust laws to the effect 
that a defendant has violated said laws shall be prima facie 
evidence against such defendant in any action or proceeding 
brought by any other party against such defendant under said 
laws as to all matters respecting which said judgment or decree 
would be an estoppel as between the parties thereto: Provided, 
That this section shall not apply to consent judgments or 
decrees entered before any testimony has been taken. Nothing 
contained in this section shall be construed to impose any 
limitation on the application of collateral estoppel, except 
that, in any action or proceeding brought under the antitrust 
laws, collateral estoppel effect shall not be given to any 
finding made by the Federal Trade Commission under the 
antitrust laws or under section 5 of the Federal Trade 
Commission Act which could give rise to a claim for relief 
under the antitrust laws.
    (b) Any proposal for a consent judgment submitted by the 
United States (including the Federal Trade Commission with 
respect to a violation of section 7) for entry in any civil 
proceeding brought by or on behalf of the United States 
(including the Federal Trade Commission with respect to a 
violation of section 7) under the antitrust laws shall be filed 
with the district court before which such proceeding in pending 
and published by the United States (including the Federal Trade 
Commission with respect to a violation of section 7) in the 
Federal Register at least 60 days prior to the effective date 
of such judgment. Any written comments relating to such 
proposal and any responses by the United States (including the 
Federal Trade Commission with respect to a violation of section 
7) thereto, shall also be filed with such district court and 
published by the United States (including the Federal Trade 
Commission with respect to a violation of section 7) in the 
Federal Register within such sixty-day period. Copies of such 
proposal and any other materials and documents which the United 
States (including the Federal Trade Commission with respect to 
a violation of section 7) considered determinative in 
formulating such proposal, shall also be made available to the 
public at the district court and in such other districts as the 
court may subsequently direct. Simultaneously with the filing 
of such proposal, unless otherwise instructed by the court, the 
United States (including the Federal Trade Commission with 
respect to a violation of section 7) shall file with the 
district court, publish in the Federal Register, and thereafter 
furnish to any person upon request, a competitive impact 
statement which shall recite--
            (1) * * *

           *       *       *       *       *       *       *

            (6) a description and evaluation of alternatives to 
        such proposal actually considered by the United States 
        (including the Federal Trade Commission with respect to 
        a violation of section 7).
    (c) the United States (including the Federal Trade 
Commission with respect to a violation of section 7) shall also 
cause to be published, commencing at least 60 days prior to the 
effective date of the judgment described in subsection (b) of 
this section, for 7 days over a period of 2 weeks in newspapers 
of general circulation of the district in which the case has 
been filed, in the District of Columbia, and in such other 
districts as the court may direct--
            (i) * * *

           *       *       *       *       *       *       *

            (iii) and a list of the materials and documents 
        under subsection (b) which the United States (including 
        the Federal Trade Commission with respect to a 
        violation of section 7) shall make available for 
        purposes of meaningful public comment, and the place 
        where such materials and documents are available for 
        public inspection.
    (d) during the 60-day period as specified in subsection (b) 
of this section, and such additional time as the United States 
(including the Federal Trade Commission with respect to a 
violation of section 7) may request and the court may grant, 
the United States (including the Federal Trade Commission with 
respect to a violation of section 7) shall receive and consider 
any written comments relating to the proposal for the consent 
judgment submitted under subsection (b). the Attorney General 
or his designee shall establish procedures to carry out the 
provisions of this subsection, but such 60-day time period 
shall not be shortened except by order of the district court 
upon a showing that (1) extraordinary circumstances require 
such shortening and (2) such shortening is not adverse to the 
public interest. At the close of the period during which such 
comments may be received, the United States (including the 
Federal Trade Commission with respect to a violation of section 
7) shall file with the district court and cause to be published 
in the Federal Register a response to such comments. Upon 
application by the United States (including the Federal Trade 
Commission with respect to a violation of section 7), the 
district court may, for good cause (based on a finding that the 
expense of publication in the Federal Register exceeds the 
public interest benefits to be gained from such publication), 
authorize an alternative method of public dissemination of the 
public comments received and the response to those comments.
    (e)(1) Before entering any consent judgment proposed by the 
United States (including the Federal Trade Commission with 
respect to a violation of section 7) under this section, the 
court shall determine that entry of such judgment is in the 
public interest. For the purpose of such determination, the 
court shall consider--
            (A) * * *

           *       *       *       *       *       *       *

    (f) In making its determination under subsection (e), the 
court may--
            (1) * * *

           *       *       *       *       *       *       *

            (4) review any comments including any objections 
        filed with the United States (including the Federal 
        Trade Commission with respect to a violation of section 
        7) under subsection (d) concerning the proposed 
        judgment and the responses of the United States to such 
        comments and objections; and

           *       *       *       *       *       *       *

    (g) Not later than 10 days following the date of the filing 
of any proposal for a consent judgment under subsection (b), 
each defendant shall file with the district court a description 
of any and all written or oral communications by or on behalf 
of such defendant, including any and all written or oral 
communications on behalf of such defendant by any officer, 
director, employee, or agent of such defendant, or other 
person, with any officer or employee of the United States 
(including the Federal Trade Commission with respect to a 
violation of section 7) concerning or relevant to such 
proposal, except that any such communications made by counsel 
of record alone with the Attorney General (or the Federal Trade 
Commission) or the employees of the Department of Justice (or 
any officer or employee of the Federal Trade Commission) alone 
shall be excluded from the requirements of this subsection. 
Prior to the entry of any consent judgment pursuant to the 
antitrust laws, each defendant shall certify to the district 
court that the requirements of this subsection have been 
complied with and that such filing is a true and complete 
description of such communications known to the defendant or 
which the defendant reasonably should have known.

           *       *       *       *       *       *       *

    (i) Whenever any civil or criminal proceeding is instituted 
by the United States (including the Federal Trade Commission 
with respect to a violation of section 7) to prevent, restrain, 
or punish violations of any of the antitrust laws, but not 
including an action under section 4A, the running of the 
statute of limitations in respect of every private or State 
right of action arising under said laws and based in whole or 
in part on any matter complained of in said proceeding shall be 
suspended during the pendency thereof and for one year 
thereafter: Provided, however, That whenever the running of the 
statute of limitations in respect of a cause of action arising 
under section 4 or 4C is suspended hereunder, any action to 
enforce such cause of action shall be forever barred unless 
commenced either within the period of suspension or within four 
years after the cause of action accrued.

           *       *       *       *       *       *       *

    Sec. 11. (a) That authority to enforce compliance with 
sections 2, 3, 7, and 8 of this Act by the persons respectively 
subject thereto is hereby vested in the Surface Transportation 
Board where applicable to common carriers subject to 
jurisdiction under subtitle IV of title 49, United States Code; 
in the Federal Communications Commission where applicable to 
common carriers engaged in wire or radio communication or radio 
transmission of energy; in the Secretary of Transportation 
where applicable to air carriers and foreign air carriers 
subject to the Federal Aviation Act of 1958; in the Federal 
Reserve Board where applicable to banks, banking associations, 
and trust companies; and in the Federal Trade Commission where 
applicable to all other character of commerce (excluding 
enforcing compliance with section 7) to be exercised as 
follows:

           *       *       *       *       *       *       *

    Sec. 13. That in any suit, action, or proceeding brought by 
or on behalf of the United States (including the Federal Trade 
Commission with respect to a violation of section 7) subpoenas 
for witnesses who are required to attend a court of the United 
States in any judicial district in any case, civil or criminal, 
arising under the antitrust laws may run into any other 
district: Provided, That in civil cases no writ of supoena 
shall issue for witnesses living out of the district in which 
the court is held at a greater distance than one hundred miles 
from the place of holding the same without the permission of 
the trial court being first had upon proper application and 
cause shown.

           *       *       *       *       *       *       *

    Sec. 15. That the several district courts of the United 
States are hereby invested with jurisdiction to prevent and 
restrain violations of this Act, and it shall be the duty of 
the several district attorneys of the United States, in their 
respective districts, under the direction of the Attorney 
General, and the duty of the Federal Trade Commission with 
respect to a violation of section 7, to institute proceedings 
in equity to prevent and restrain such violations. Such 
proceedings may be by way of petition setting forth the case 
and praying that such violation shall be enjoined or otherwise 
prohibited. When the parties complained of shall have been duly 
notified of such petition, the court shall proceed, as soon as 
may be, to the hearing and determination of the case; and 
pending such petition, and before final decree, the court may 
at any time make such temporary restraining order or 
prohibition as shall be deemed just in the premises. Whenever 
it shall appear to the court before which any such proceeding 
may be pending that the ends of justice require that other 
parties should be brought before the court, the court may cause 
them to be summoned, whether they reside in the district in 
which the court is held or not, and subpoenas to that end may 
be served in any district by the marshal thereof.

           *       *       *       *       *       *       *

                              ----------                              

                      FEDERAL TRADE COMMISSION ACT

           *       *       *       *       *       *       *
    Sec. 5. (a) * * *
    (b) Whenever the Commission shall have reason to believe 
that any such person, partnership, or corporation has been or 
is using any unfair method of competition (excluding the 
consummation of a proposed merger, acquisition, joint venture, 
or similar transaction subject to section 7 of the Clayton Act) 
or unfair or deceptive act or practice in or affecting 
commerce, and if it shall appear to the Commission that a 
proceeding by it in respect thereof would be to the interest of 
the public, it shall issue and serve upon such person, 
partnership, or corporation a complaint stating its charges in 
that respect and containing a notice of a hearing upon a day 
and at a place therein fixed at least thirty days after the 
service of said complaint. The person, partnership, or 
corporation so complained of shall have the right to appear at 
the place and time so fixed and show cause why an order should 
not be entered by the Commission requiring such person, 
partnership, or corporation to cease and desist from the 
violation of the law so charged in said complaint. Any person, 
partnership, or corporation may make application, and upon good 
cause shown may be allowed by the Commission to intervene and 
appear in said proceeding by counsel or in person. The 
testimony in any such proceeding shall be reduced to writing 
and filed in the office of the Commission. If upon such hearing 
the Commission shall be of the opinion that the method of 
competition (excluding the consummation of a proposed merger, 
acquisition, joint venture, or similar transaction subject to 
section 7 of the Clayton Act) or the act or practice in 
question is prohibited by this Act, it shall make a report in 
writing in which it shall state its findings as to the facts 
and shall issue and cause to be served on such person, 
partnership, or corporation an order requiring such person, 
partnership, or corporation to cease and desist from using such 
method of competition (excluding the consummation of a proposed 
merger, acquisition, joint venture, or similar transaction 
subject to section 7 of the Clayton Act) or such act or 
practice. Until the expiration of the time allowed for filing a 
petition for review, if no such petition has been duly filed 
within such time, or, if a petition for review has been filed 
within such time then until the record in the proceeding has 
been filed in a court of appeals of the United States, as 
hereinafter provided, the Commission may at any time, upon such 
notice and in such manner as it shall deem proper, modify or 
set aside, in whole or in part, any report or any order made or 
issued by it under this section. After the expiration of the 
time allowed for filing a petition for review, if no such 
petition has been duly filed within such time, the Commission 
may at any time, after notice and opportunity for hearing, 
reopen and alter, modify, or set aside, in whole or in part, 
any report or order made or issued by it under this section, 
whenever in the opinion of the Commission conditions of fact or 
of law have so changed as to require such action or if the 
public interest shall so require, except that (1) the said 
person, partnership, or corporation may, within sixty days 
after service upon him or it of said report or order entered 
after such a reopening, obtain a review thereof in the 
appropriate circuit court of appeals of the United States, in 
the manner provided in subsection (c) of this section; and (2) 
in the case of an order, the Commission shall reopen any such 
order to consider whether such order (including any affirmative 
relief provision contained in such order) should be altered, 
modified, or set aside, in whole or in part, if the person, 
partnership, or corporation involved files a request with the 
Commission which makes a satisfactory showing that changed 
conditions of law or fact require such order to be altered, 
modified, or set aside, in whole or in part. The Commission 
shall determine whether to alter, modify, or set aside any 
order of the Commission in response to a request made by a 
person, partnership, or corporation under paragraph (2) not 
later than 120 days after the date of the filing of such 
request.

           *       *       *       *       *       *       *

    Sec. 9. That for the purposes of this Act the commission, 
or its duly authorized agent or agents, shall at all reasonable 
times have access to, for the purpose of examination, and the 
right to copy any documentary evidence of any corporation being 
investigated or proceeded against; and the commission shall 
have power to require by subpoena the attendance and testimony 
of witnesses and the production of all such documentary 
evidence relating to any matter under investigation. Any member 
of the commission may sign subpoenas, and members and examiners 
of the commission may administer oaths and affirmations, 
examine witnesses, and receive evidence.
     Such attendance of witnesses, and the production of such 
documentary evidence, may be required from any place in the 
United States, at any designated place of hearing. And in case 
of disobedience to a subpoena the commission may invoke the aid 
of any court of the United States in requiring the attendance 
and testimony of witnesses and the production of documentary 
evidence.
     Any of the district courts of the United States within the 
jurisdiction of which such inquiry is carried on may, in case 
of contumacy or refusal to obey a subpoena issued to any 
corporation or other person, issue an order requiring such 
corporation or other person to appear before the commission, or 
to produce documentary evidence if so ordered, or to give 
evidence touching the matter in question; and any failure to 
obey such order of the court may be punished by such court as a 
contempt thereof.
     Upon the application of the Attorney General of the United 
States, at the request of the commission, 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.
     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 subject to 
section 7 of the Clayton Act 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.
     The commission may order testimony to be taken by 
deposition in any proceeding or investigation pending under 
this Act at any stage of such proceeding or investigation. Such 
depositions may be taken before any person designated by the 
commission and having power to administer oaths. Such testimony 
shall be reduced to writing by the person taking the 
deposition, or under his direction, and shall then be 
subscribed by the deponent. Any person may be compelled to 
appear and depose and to produce documentary evidence in the 
same manner as witnesses may be compelled to appear and testify 
and produce documentary evidence before the commission as 
hereinbefore provided.
     Witnesses summoned before the commission shall be paid the 
same fees and mileage that are paid witnesses in the courts of 
the United States, and witnesses whose depositions are taken 
and the persons taking the same shall severally be entitled to 
the same fees as are paid for like services in the courts of 
the United States.

           *       *       *       *       *       *       *

    Sec. 13. (a) * * *
    (b) Whenever the Commission has reason to believe--
            (1) that any person, partnership, or corporation is 
        violating, or is about to violate, any provision of law 
        enforced by the Federal Trade Commission (excluding 
        section 7 of the Clayton Act and section 5(a)(1) with 
        respect to the consummation of a proposed merger, 
        acquisition, joint venture, or similar transaction 
        subject to section 7 of the Clayton Act), and

           *       *       *       *       *       *       *

                            Dissenting Views

    Although H.R. 5402, the ``Standard Merger and Acquisition 
Reviews Through Equal Rules Act of 2014'' or ``SMARTER Act,'' 
may have some facial appeal, we are concerned that this measure 
would undermine the independence of the Federal Trade 
Commission (FTC) and contravene the agency's unique role in 
developing antitrust policy. H.R. 5402 does this by eliminating 
the FTC's ability to use the procedures established under the 
Federal Trade Commission Act\1\ (FTC Act) to enforce antitrust 
law in merger cases, including, most importantly, its ability 
to use administrative adjudication. Moreover, while this 
proposal purports to implement recommendations of the Antitrust 
Modernization Commission (AMC), it goes far beyond the AMC's 
recommendations in some respects by reaching the FTC's ability 
to address non-merger activity. Finally, although we share the 
conclusion of most observers who believe that the preliminary 
injunction standards applicable to the FTC and to the 
Department of Justice (DOJ) in merger cases are the same as a 
practical matter, to the extent that the FTC Act standard is, 
in fact, more enforcement-friendly, as H.R. 5402's proponents 
claim, then the bill wrongly chooses the weaker standard to be 
the uniform standard.
---------------------------------------------------------------------------
    \1\Federal Trade Commission Act of 1914, Pub. L. No. 63-203, 38 
Stat. 717 (1914), codified at 15 U.S.C. Sec. Sec. 41-58 (2014).
---------------------------------------------------------------------------
    H.R. 5402 is not a modest measure. It represents a major 
change to the status quo by undermining the FTC's fundamental 
nature as an independent administrative agency charged with 
enforcing antitrust laws and developing antitrust policy in a 
stable, long-term manner using bipartisan expertise. Reducing 
the FTC's independence directly conflicts with Congress's 
intent in creating this antitrust enforcement agency and 
policymaking body to be relatively shielded from political, and 
particularly Executive Branch, interference. More generally, 
the elimination of distinctions between the FTC and the DOJ in 
merger enforcement actions potentially opens the door to the 
elimination of the FTC itself by chipping away at the various 
differences that justify its separate existence.
    We share the views expressed by FTC Chairwoman Edith 
Ramirez, who wrote to the Committee to express her ``serious 
concerns'' about the ``far-reaching immediate effects'' and the 
``potential for significant unintended consequences'' of an 
earlier, but substantially similar, draft of the SMARTER 
Act.\2\ In addition, the American Antitrust Institute, a 
consumer-oriented antitrust organization, expressed similar 
concerns about the legislation, particularly with respect to 
its elimination of the FTC's ability to use administrative 
adjudication in merger cases.\3\
---------------------------------------------------------------------------
    \2\Letter from the Honorable Edith Ramirez, Chairwoman, Federal 
Trade Commission, to Representatives Spencer Bachus (R-AL), Chair, and 
Henry C. Johnson, Jr. (D-GA), Ranking Member, of the Subcomm. on 
Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the 
Judiciary (Apr. 2, 2014) on file with Democratic staff of the H. Comm. 
on the Judiciary [hereinafter ``Ramirez Letter''].
    \3\Letter from Albert A. Foer, President, American Antitrust 
Institute, to Representatives Spencer Bachus (R-AL), Chair, and Henry 
C. Johnson, Jr. (D-GA), Ranking Member, of the Subcomm. on Regulatory 
Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary 
(Apr. 9, 2014) on file with Democratic staff of the H. Comm. on the 
Judiciary [hereinafter ``AAI Letter''].
---------------------------------------------------------------------------
    For these reasons, and those described below, we urge our 
colleagues to oppose H.R. 5402.

                       DESCRIPTION AND BACKGROUND

                              DESCRIPTION

    H.R. 5402 eliminates the ability of the Federal Trade 
Commission (FTC) to use the procedures of the FTC Act in merger 
enforcement cases and with respect to certain types of non-
merger activity. In its stead, the bill requires the FTC to use 
the procedures available to the DOJ under the Clayton Antitrust 
Act in such circumstances.\4\ The following is a description of 
the bill's substantive provisions.
---------------------------------------------------------------------------
    \4\Clayton Antitrust Act of 1914, Pub. L. No. 63-212, 38 Stat. 730 
(1914), codified at 15 U.S.C. Sec. Sec. 12-27, 29 U.S.C. Sec. Sec. 52-
53 (2014).
---------------------------------------------------------------------------
    Section 2 of H.R. 5402 makes numerous amendments to the 
Clayton Act in order to subject the FTC to the merger 
enforcement procedures of the Clayton Act. Section 2(1) amends 
section 4F of the Clayton Act, which currently requires the 
U.S. Attorney General, whenever the government has brought an 
action under the antitrust laws, to notify any state attorney 
general when he or she has reason to believe that the state 
would be entitled to bring an action under the Clayton Act 
based on substantially the same alleged violation. It also 
requires the U.S. Attorney General to provide assistance upon 
request of any state attorney general in any actual or 
potential cause of action by the state in these circumstances. 
Section 2(1) of the bill adds references to the ``Federal Trade 
Commission'' after each reference to the U.S. Attorney General 
of the United States.
    Section 2(2) of the bill amends section 5 of the Clayton 
Act, which specifies the evidentiary weight of judgments and 
consent decrees in any criminal or civil proceeding brought by 
the government under the antitrust laws in any action by a 
third party. Section 5 also specifies procedures for public 
notice and comment on proposed consent decrees (including the 
requirement that the government file a competitive impact 
statement), requires a court to make a public interest 
determination prior to entering a consent judgment, outlines 
procedures for making such a public interest determination, 
requires a defendant to file with the court written or oral 
communications with the government, makes inadmissible as 
evidence competitive impact statements or public interest 
determinations in any action brought against a defendant by a 
third party, and suspends the statute of limitations for every 
private or state right of action under the antitrust laws when 
the federal government institutes a proceeding. Section 2(2) of 
the bill adds references specifying that the term ``United 
States'' as used throughout this provision includes the FTC 
with respect to merger cases.
    Section 2(3) of H.R. 5402 amends section 11(a) of the 
Clayton Act, which reserves enforcement authority for certain 
provisions of the Clayton Act for agencies other than the DOJ. 
Among the other agencies listed is the FTC ``where applicable 
to all other character of commerce.'' Section 2(3) of the bill 
would specifically exclude from this authority enforcement of 
section 7 of the Clayton Act, governing mergers and other 
acquisitions.
    Section 2(4) of the bill amends section 13 of the Clayton 
Act, which provides that in any government suit, subpoenas for 
witnesses who are required to attend a federal court in any 
judicial district in an antitrust case may have effect in any 
other district when the witness lives within 100 miles of the 
trial court unless the trial court permits the subpoena to 
extend beyond the 100-mile reach. Section 2(4) of the bill 
would specify that reference to the ``United States'' in this 
provision includes the FTC in merger cases.
    Section 2(5) of the bill amends section 15 of the Clayton 
Act, which grants federal district courts jurisdiction to 
consider violations of the Clayton Act. It also makes it the 
duty of the U.S. Attorney General and U.S. Attorneys to 
institute court proceedings to restrain violations of the Act. 
In addition, section 15 specifies that the court may provide 
injunctive relief, issue temporary restraining orders, and 
summon other parties through subpoena if necessary when the 
ends of justice require in such cases. Section 2(5) of the bill 
adds a reference to the FTC in the provision outlining the 
``duty'' of the U.S. Attorney General and U.S. Attorneys.
    Section 3 of the bill makes several amendments to the FTC 
Act that, broadly speaking, eliminate the FTC's authority to 
act pursuant to the FTC Act's provisions in merger cases and 
certain other circumstances. Section 3(1) amends section 5(b) 
of the FTC Act, which provides the FTC with the authority to 
institute administrative proceedings against a person, 
partnership, or corporation whenever the FTC determines that 
such a party has been or is using ``any unfair method of 
competition,'' among other things. If the FTC determines after 
a notice and hearing that the target of the complaint has 
engaged in the ``unfair method of competition'' and prepares a 
report to that effect, the FTC may issue a cease and desist 
order. A party may appeal an FTC decision to a federal court of 
appeals.
    A central objection to the SMARTER Act is in section 
3(1)(A) of the bill, which would exclude from the definition of 
``unfair method of competition'' any ``unfair method of 
competition that would result from the consummation of a 
merger, acquisition, joint venture, or similar transaction.'' 
The exclusion of a ``joint venture'' or ``similar transaction'' 
from the definition of ``unfair method of competition'' 
suggests that the bill's elimination of the FTC's 
administrative authority extends beyond mergers to include 
arguably non-merger anticompetitive conduct.
    Section 3(2) of the bill amends section 9 of the FTC Act, 
which specifies, among other things, that the FTC may request, 
through the U.S. Attorney General, that a federal district 
court issue a writ of mandamus to any person, partnership, or 
corporation to comply with any of the FTC's orders pursuant to 
the FTC Act. Section 3(2) of the bill allows the FTC to 
directly seek a writ of mandamus from a federal district court 
with respect to any activity in preparation for a merger, 
acquisition, joint venture, or similar transaction which if 
consummated, may result in any unfair method of competition.
    Section 3(3) of the bill amends section 13(b)(1) of the FTC 
Act, which sets forth the FTC's authority to bring suit in a 
federal district court to enjoin any conduct that violates any 
provision of law enforced by the FTC. Section 13(b) also 
articulates the standard for granting a preliminary injunction, 
which requires a showing that, ``weighing the equities and 
considering the [FTC's] likelihood of ultimate success, such 
action would be in the public interest.'' It further provides 
that if the FTC does not file a complaint within a time period 
specified by the court not to exceed 20 days, the preliminary 
injunction is dissolved. Section 3(3) of the bill excludes from 
section 13(b) any actions that violate section 7 of the Clayton 
Act and section 5(a)(1) of the FTC Act (which declares, in 
part, that unfair methods of competition are unlawful) with 
respect to an unfair method of competition that would result 
from the consummation of a merger, acquisition, joint venture, 
or similar transaction. While many commentators say that, in 
practice, the preliminary injunctions applicable to the FTC and 
the DOJ are the same, to the extent that the FTC Act standard 
is different and ``stronger'' from a consumer-protection 
perspective, the bill's proponents offer no reason why the FTC 
standard, rather than the general standard applicable to DOJ, 
should not be the standard applicable to both agencies in 
merger cases.

                               BACKGROUND

A. The Federal Trade Commission
            1. History and Reasons for Creation
    In 1890, the Sherman Antitrust Act was enacted to stop the 
anti-consumer abuses resulting from an unchecked wave of 
corporate mergers.\5\ Thereafter, the position of Assistant 
Attorney General for Antitrust in the DOJ was created in 
1903.\6\ Neither effort, however, was sufficiently effective to 
stem these abuses. Thus, President Woodrow Wilson, in 1914, 
signed the FTC Act,\7\ which established the FTC and made 
unlawful, inter alia, ``unfair methods of competition.''\8\ 
That same year, President Wilson also signed into law the 
Clayton Antitrust Act.\9\ Congress created the FTC to encourage 
development of antitrust policy by antitrust experts through an 
independent administrative agency that would share enforcement 
authority with the DOJ\10\ and have the exclusive authority to 
enforce the FTC Act.\11\ Additionally, Congress gave the FTC 
broad investigative and reporting powers and empowered the 
Commission to use an administrative adjudication process to 
enforce the antitrust laws rather than try cases before a 
federal judge, though the FTC's decisions may be appealed to a 
federal court of appeals.\12\
---------------------------------------------------------------------------
    \5\15 U.S.C. Sec. Sec. 1-7 (2014).
    \6\The Antitrust Division became a separate operating unit within 
DOJ in 1933. Antitrust Modernization Commission, Report and 
Recommendations [hereinafter ``AMC Report''], at 129 (Apr. 2007), 
http://govinfo.library.unt.edu/amc/report_recommendation/
amc_final_report.pdf.
    \7\15 U.S.C. Sec. Sec. 41-58 (2014).
    \8\15 U.S.C. Sec. 45(a) (2014); Marc Winerman, A Brief History of 
the Federal Trade Commission: Federal Trade Commission 90th Anniversary 
Symposium, 6 (Sept. 22, 2004), http://www.ftc.gov/sites/default/files/
attachments/ftc-90-symposium/90thanniv_program.pdf [hereinafter FTC 
History].
    \9\FTC History, at 6; 15 U.S.C. Sec. Sec. 12-27, 29 U.S.C. 
Sec. Sec. 52-53 (2014).
    \10\An ``indepedent'' agency is one that has some measure of 
independence from the President. The main mark of such independence is 
that the President cannot remove the head of such an agency without 
cause. Independent agencies are often styled ``commissions'' or 
``boards.'' STEPHEN G. BREYER, et al., ADMINISTRATIVE LAW AND 
REGULATORY POLICY, at 100 (4th ed. 1999).
    \11\While the FTC has no authority to enforce the Sherman Act, the 
Supreme Court has held that any conduct that violates section 1 of the 
Sherman Act would also violate section 5(a) of the FTC Act. Federal 
Trade Comm'n v. California Dental Ass'n, 526 U.S. 756, 763 n.3 (1999) 
(``The FTC Act's prohibition of unfair competition and deceptive acts 
or practices . . . overlaps the scope of Sec. 1 of the Sherman Act.'').
    \12\15 U.S.C. Sec. 45(b) (2014).
---------------------------------------------------------------------------
    According to one historical study of the origins of the 
FTC, the congressional advocates for its creation were 
dissatisfied with what, in their view, was the failure of the 
Sherman Antitrust Act to stop the merger wave and corporate 
abuses that occurred in the 24 years from its enactment to the 
passage of the FTC Act in 1914.\13\ Advocates for the creation 
of the FTC disclaimed any intent to amend the Sherman Act or to 
undermine DOJ's enforcement role, but, rather, sought to 
enhance existing antitrust law and enforcement.\14\ In 
particular, they ``wanted a new agency that would prosecute if 
the [DOJ] faltered, enforcing a flexible new standard where the 
Sherman Act might not.''\15\
---------------------------------------------------------------------------
    \13\Marc Winerman, The Origins of the FTC: Concentration, 
Cooperation, Control, and Competition, 71 Antitrust L. J. 74 (2003), 
http://www.ftc.gov/sites/default/files/attachments/federal-trade-
commission-history/origins.pdf.
    \14\Id.
    \15\Id.
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    Congress historically has sought to give the FTC broad 
authority to prohibit unfair methods of competition. This is 
demonstrated by the fact that every time the Supreme Court has 
issued a decision restricting the FTC's statutory authority, 
Congress has responded by amending the FTC Act to expand the 
FTC's authority.\16\ In reaction against this ever-increasing 
grant of authority, however, something of a backlash against 
the FTC began in 1980, which one commentator described as ``a 
tidal wave of response and restricting legislation.''\17\ Most 
recently, for example, the U.S. Chamber of Commerce has been 
highly critical of the FTC for its use of its authority under 
section 5 of the FTC Act to prohibit ``unfair methods of 
competition.''\18\
---------------------------------------------------------------------------
    \16\FTC History, at 7-9 (outlining instances in the 1920's and 
1930's in which Congress expanded the FTC's authority in response to 
restrictive Supreme Court decisions, and also highlighting further 
expansions of the FTC's authority by Congress in the 1950's and 
1970's).
    \17\Id. at 9.
    \18\U.S. Chamber of Commerce, Unfair Methods of Competition Under 
Section 5 of the FTC Act: Does the U.S. Need Rules ``Above and Beyond 
Antitrust''?, GCP: The Antitrust Chronicle, (Sept. 2009), http://
www.uschamber.com/sites/default/files/reports/0909antrust_0.pdf.
---------------------------------------------------------------------------
            2. LFTC and the Broader Antitrust Merger Enforcement Regime
    As noted, the DOJ's Antitrust Division and the FTC's Bureau 
of Competition enforce the Nation's antitrust laws jointly. 
Both agencies enforce section 7 of the Clayton Act, which 
prohibits anticompetitive mergers and other types of 
acquisitions.\19\ Pursuant to this responsibility, both have 
the authority to conduct antitrust reviews of proposed mergers 
and acquisitions. To facilitate coordination between them, the 
DOJ and FTC developed joint standards known as the ``Merger 
Guidelines'' that outline the type of inquiry to be followed in 
reviewing a proposed merger.\20\ The Guidelines state, ``The 
unifying theme of these Guidelines is that mergers should not 
be permitted to create, enhance, or entrench market power or to 
facilitate its exercise.''\21\
---------------------------------------------------------------------------
    \19\15 U.S.C. Sec. 21(a) (2014).
    \20\U.S. Dep't of Justice and Federal Trade Comm'n, Horizontal 
Merger Guidelines (2010).
    \21\Id. at 2.
---------------------------------------------------------------------------
    With respect to the review of a proposed merger, once 
parties make the requisite filings under the Hart-Scott-Rodino 
Antitrust Improvements Act of 1976\22\ (HSR), which established 
a pre-merger review process for transactions that meet certain 
dollar thresholds, it is up to the agencies to decide during 
that initial 30-day review period which agency will review the 
transaction. The agencies have developed an informal process 
that relies primarily upon historical experience in the 
relevant industry to determine which agency has a better claim 
to review a particular transaction.
---------------------------------------------------------------------------
    \22\Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. 
No. 94-435, 90 Stat. 1383 (1976), codified at 15 U.S.C. Sec. 18a 
(2014).
---------------------------------------------------------------------------
    If the reviewing agency ultimately determines that the 
transaction is illegal, it will file a complaint in federal 
court (if the enforcement agency is DOJ) or institute an 
administrative proceeding (if the enforcement agency is FTC) to 
stop the parties from consummating the transaction. Often 
times, such suits are resolved with the entry of a consent 
decree whereby the merger parties agree to take certain steps 
(usually the divestiture of certain assets, sometimes 
commitments by the merging parties to take certain other 
actions) to address the reviewing agency's antitrust concerns. 
As a practical matter, the HSR pre-merger review process has 
dramatically reduced the amount of antitrust litigation since 
its enactment.
            3. Preliminary injunctions in merger cases
    In the exceedingly rare instances where the government and 
the merging parties do not reach a consent agreement at the 
moment the government has filed suit, the government may seek a 
temporary restraining order and a preliminary injunction to 
stop consummation of the merger while the government pursues 
its complaint. Nominally, FTC and DOJ are subject to different 
standards for the grant of preliminary injunctions. While the 
dominant view is that in practice both standards essentially 
are the same, there are some who believe that the FTC standard 
is more favorable to the enforcement agency.
B. Antitrust Modernization Commission
    Congress created the Antitrust Modernization Commission 
(AMC) in 2002 to examine whether antitrust laws, policies, and 
procedures needed to be amended in light of changes to the 
economy, and particularly the impact of the rise of the high-
technology sector and its implications for antitrust and 
competition policy.\23\ In 2007, the AMC issued a 449-page 
report outlining 80 recommendations for revisions to antitrust 
law and policy.\24\ Only two of these 80 recommendations--
recommending the elimination of FTC's administrative 
adjudication authority for merger cases and the adoption of a 
uniform preliminary injunction standard--are relevant to 
consideration of the SMARTER Act.
---------------------------------------------------------------------------
    \23\Antitrust Modernization Commission Act of 2002, Pub. L. No. 
107-273, Sec. 11054(h), 116 Stat. 1856, 1857 (2002).
    \24\AMC Report.
---------------------------------------------------------------------------

                        CONCERNS WITH H.R. 5402

  I. H.R. 5402 WOULD UNDERMINE THE FTC'S INDEPENDENCE AND CONTRAVENE 
 CONGRESS'S PURPOSE IN CREATING THE AGENCY, ESPECIALLY BY ELIMINATING 
    THE FTC'S ADMINISTRATIVE ADJUDICATION AUTHORITY IN MERGER CASES.

    H.R. 5402 would effectuate a fundamental change to the 
FTC's century-old organizational structure and lessen the 
agency's independence. By eliminating its authority to pursue 
administrative litigation in merger cases and other 
circumstances, the bill would essentially undermine the FTC's 
character as an independent administrative agency and turn it 
into another executive enforcement agency in HSR merger cases, 
which contravenes Congress's purpose in establishing the FTC in 
the first place.
    As the AMC Report recognized, Congress created the FTC as 
an independent agency--that is, one with a considerable measure 
of independence from the President--not only to supplement the 
DOJ's enforcement activity where Congress thought DOJ 
enforcement may be lacking, but also to develop antitrust 
policy by relying on a body of antitrust experts rather than 
generalist courts or the DOJ, which, as an arm of the Executive 
Branch, may be subject to dramatic swings in political 
ideology.\25\ As FTC Chairwoman Ramirez noted, ``Congress 
created the Commission in 1914 as a bipartisan expert agency 
that would augment existing antitrust enforcement authority by 
taking a considered and long-term approach to developing 
antitrust law and safeguarding competition,''\26\ recognizing 
that ``American consumers would benefit from an expert agency 
with the means to develop competition law and policy over 
time.''\27\ By weakening the FTC's independence, H.R. 5402 
jeopardizes these benefits for American consumers.
---------------------------------------------------------------------------
    \25\Id. at 129 (noting that Congress ``also believed that an 
administrative agency--conducting administrative adjudication of 
antitrust cases, and vested with broad information-gathering powers--
would be a better vehicle for developing more flexible standards of 
antitrust law than were the courts.'').
    \26\Ramirez Letter.
    \27\Id.
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    Beyond the specific changes proposed by H.R. 5402, we are 
wary of any measure to alter, and possibly diminish, the FTC's 
authority. Opponents of the FTC's enforcement activities have 
engaged in a longstanding campaign to undermine the agency, 
both because of its role as an antitrust enforcer and also 
because of its work in the consumer protection arena. Any 
proposal to alter the FTC's authority, and particularly one 
that would eliminate its distinctiveness vis a vis the DOJ, 
should be viewed with skepticism. Although H.R. 5402 is 
ostensibly limited to HSR merger cases, eliminating 
distinctions between the DOJ and the FTC is a possible way to 
justify ultimately eliminating the FTC altogether, at least as 
an antitrust enforcement and policymaking agency.
    In addition, H.R. 5402 does not appear to address a 
particularly pressing or widespread problem. To the extent that 
the main concern of H.R. 5402's proponents is to reduce costs 
and uncertainty by promoting uniformity in merger reviews, it 
should be noted that FTC and DOJ already analyze mergers by 
following the same substantive policy in conducting pre-merger 
reviews, i.e., the joint Merger Guidelines. The changes that 
H.R. 5402 contemplates would apply in the exceedingly rare 
instances where: (1) a transaction is large enough to merit HSR 
review; (2) after the review, the reviewing agency determines 
that it would challenge the transaction through litigation; (3) 
the parties do not agree to any settlement, including 
divestures and other commitments; and (4) the parties choose to 
continue with their transaction despite the filing of a 
complaint by the reviewing agency rather than abandoning the 
transaction. Instances where the FTC would seek a preliminary 
injunction and use its administrative process are rare, and 
instances when the FTC seeks to use its administrative process 
after losing a preliminary injunction proceeding in court are 
even more rare. Additionally, the FTC's internal procedures 
already make it highly unusual that the agency would ever seek 
such a ``second bite at the apple.''\28\ Nonetheless, there may 
be rare instances where, even in the ``second bite'' scenario, 
it is in the public interest to allow the FTC to pursue 
administrative litigation where developing a full 
administrative record would help make an advancement in the law 
in ways that a court would be less well-equipped to do.
---------------------------------------------------------------------------
    \28\H.R. 5402's proponents may cite the actions of the FTC in the 
Whole Foods-Wild Oats merger as an example of the FTC's problematic use 
of administrative proceedings after losing a preliminary injunction 
proceeding in court. In that case, however, the U.S. Court of Appeals 
for the D.C. Circuit ultimately vindicated the FTC's pursuit of 
administrative litigation after losing the preliminary injunction 
proceeding in court when the appeals court reversed the district 
court's denial of the FTC's request for a preliminary injunction. FTC 
v. Whole Foods Market, Inc., 548 F.3d 1028 (D.C. Cir. 2008). 
Additionally, as both the AMC and AAI have pointed out, the FTC's own 
internal practice and procedures make the ``second bite'' scenario 
unlikely. AMC Report at 141; AAI Letter at note 4.
---------------------------------------------------------------------------
    It is with the foregoing in mind that we are particularly 
troubled by H.R. 5402's elimination of the FTC's authority to 
use administrative adjudication in merger enforcement matters. 
As Chairwoman Ramirez noted, ``Congress gave the FTC unique 
tools to carry out [the FTC's] special charge. These include 
expert research authority, broad information-gathering power, 
and, of particular significance here, an adjudicative function 
in which the FTC considers and decides cases as an expert 
tribunal, subject to review by a federal court of 
appeals.''\29\ Chairwoman Ramirez further noted that this
---------------------------------------------------------------------------
    \29\Ramirez Letter.

        quasi-judicial role is a defining characteristic of the 
        FTC and is critical to our ability to fulfill our 
        mission to promote competition and advance consumer 
        welfare. It allows the Commission to conduct thorough 
        hearings to develop both the facts and the law in a 
        broad variety of antitrust matters. Our adjudicative 
        function has been particularly valuable in complex 
        areas such as hospital mergers, where the Commission 
        has used the combination of its information-gathering 
        power and case-specific law enforcement authority to 
        develop a coordinated, well-considered approach to 
        challenging anticompetitive conduct, one that has now 
        been endorsed by the federal courts.\30\
---------------------------------------------------------------------------
    \30\Id.

    In discussing the value of administrative adjudication, the 
American Antitrust Institute (AAI) stated in its letter to the 
---------------------------------------------------------------------------
Committee:

        [P]rudence compels caution in any tinkering with a 
        system of dual enforcement including administrative 
        adjudication that emerged out of robust debate in the 
        course of the 1912 Presidential election campaign and 
        that Congress adopted two years later in the face of 
        grave concern over the fate of antitrust enforcement 
        generally when left exclusively in the hands of 
        generalist judges.

                              .    .    .

        AAI believes that eliminating FTC administrative 
        adjudication would almost surely be counterproductive. 
        We would thereby (a) lose the considerable benefits of 
        expert agency policy evolution, the original Wilson/
        Brandeis vision giving rise to the FTC's creation a 
        hundred years ago and more important than ever for 
        sound evolution of merger policy in the 21st Century; 
        and (b) exacerbate any inefficiency of dual enforcement 
        generally since we would then have two enforcement 
        agencies applying the same merger law standards and 
        procedures to different companies in different 
        industries in cases brought exclusively to generalist 
        courts. A more logical course would be channeling all 
        merger enforcement to the FTC and its expert 
        administrative processes.\31\
---------------------------------------------------------------------------
    \31\AAI Letter at para.para.3, 5.

    Similarly, at a hearing before the Subcommittee on 
Regulatory Reform, Commercial, and Antitrust Law examining 
draft legislation that was substantially similar to H.R. 5402, 
Professor John Kirkwood of Seattle University School of Law 
expressed great concern about the removal of the FTC's 
administrative adjudication authority.\32\ He testified that 
the purpose of having this authority was to allow the FTC to 
develop antitrust law in a less partisan, more expert way than 
generalist courts and a DOJ under the control of one political 
party could.\33\ Professor Kirkwood's concern was twofold. 
First, removing the FTC's administrative adjudication authority 
in merger cases might lead to a ``slippery slope'' whereby its 
authority with respect to other areas of antitrust enforcement 
could eventually be eliminated or consolidated with that of 
DOJ.\34\ Second, administrative adjudication supports the FTC's 
congressionally-mandated mission of developing administrative 
expertise through sustained attention, information-gathering, 
and vigorous enforcement.\35\ Professor Kirkwood acknowledged 
that the unique benefits of administrative adjudication were 
not as strong in all cases. In those instances when an industry 
is changing rapidly or when an agency has not developed much 
expertise in it, however, an administrative proceeding would be 
quite helpful, such as the FTC's use of administrative 
proceedings in hospital merger enforcement as an example of 
such benefits.\36\
---------------------------------------------------------------------------
    \32\Subcommittee Hearing (written statement of John B. Kirkwood, 
Professor of Law and Associate Dean for Strategic Planning and Mission, 
Seattle University School of Law).
    \33\Id.
    \34\Id. at 5.
    \35\Id.
    \36\Id.
---------------------------------------------------------------------------
    In agreeing with the views of Chairwoman Ramirez, Mr. Foer, 
and Professor Kirkwood, Ranking Member John Conyers, Jr. (D-MI) 
stated that H.R. 5402, ``rather than strengthening the FTC's 
enforcement authority, does exactly the opposite.''\37\ Ranking 
Member Conyers further stated that ``our preeminent goal should 
be to strengthen, not weaken, antitrust enforcement to protect 
consumers.''\38\
---------------------------------------------------------------------------
    \37\Unofficial Tr. of the Markup of H.R. 5402, the ``Standard 
Merger and Acquisition Reviews Through Equal Rules Act,'' by the H. 
Comm. on the Judiciary, 113th Cong., at 150 (Sept. 10, 2014).
    \38\Id.
---------------------------------------------------------------------------

     II. H.R. 5402'S SCOPE IS BROADER THAN THE AMC RECOMMENDATIONS.

    To the extent that H.R. 5402's proponents claim that the 
bill simply applies the AMC's recommendations, we note that 
H.R. 5402 exceeds what the AMC contemplated in its 
recommendations. Specifically, the AMC recommended that 
Congress should eliminate the FTC's authority to pursue 
administrative litigation in HSR cases and that it should 
ensure that the same standard that DOJ is subject to when 
seeking a preliminary injunction in an HSR case also applies to 
the FTC.\39\ First, rather than limiting its provisions to 
these two recommendations, the bill would make the FTC 
functionally equivalent to the DOJ in large merger cases, 
which, arguably, is a step towards eliminating the dual 
enforcement regime, which the AMC specifically said it was not 
recommending.\40\ Second, the bill's carve-out for the FTC's 
administrative adjudication authority would reach beyond merger 
cases to also include a ``joint venture'' and ``similar 
transaction,'' meaning that the loss of the FTC administrative 
adjudication authority would extend beyond the scope of section 
7 of the Clayton Act to also include potentially non-merger 
activity. The bill also eliminates the independent grant of 
authority to the FTC under Clayton Act section 11, eliminating 
administrative adjudication for consummated mergers too. Third, 
the bill would impose certain unhelpful or currently 
ineffective Clayton Act obligations on the FTC merger 
enforcement process, such as certain public notice and comment 
requirements concerning proposed consent decrees and the Tunney 
Act requirement that a district court make a public interest 
determination before entering a consent judgment.\41\
---------------------------------------------------------------------------
    \39\AMC Report at 140-41.
    \40\Id. at 129 (recommending ``no comprehensive change to the 
existing system in which both the FTC and the DOJ enforce the antitrust 
laws'').
    \41\See AAI Letter at para.7 (noting that reform of judicial and 
public vetting of merger settlements was ``one aspect of institutional 
reform in the merger enforcement field that is now timely for 
Congressional consideration'').
---------------------------------------------------------------------------

  III. WITH RESPECT TO THE PRELIMINARY INJUNCTION STANDARD, H.R. 5402 
     ADDRESSES A NON-EXISTENT PROBLEM, BUT IN SO DOING EXPOSES ITS 
     PROPONENTS' INTENT TO APPLY A LESS CONSUMER-FRIENDLY STANDARD.

    By making the preliminary injunction standard applicable in 
DOJ merger cases\42\ also apply to the FTC in merger cases\43\, 
H.R. 5402 does not solve a real problem. The dominant opinion 
among courts, academics, and the antitrust bar appears to be 
that the standards, while nominally different, are the same in 
practice.\44\ Assuming there is a real difference between the 
injunction standards, however, attempting to unify them once 
again raises the concern that the bill simply seeks to 
undermine the FTC's independence and distinctiveness, contrary 
to Congress's intent in creating an independent antitrust 
enforcement agency in the first place.
---------------------------------------------------------------------------
    \42\When DOJ seeks a preliminary injunction, it acts pursuant to 
section 15 of the Clayton Act, which provides, in part, that a court 
hearing a case under the Act ``may at any time make such temporary 
restraining order or prohibition as shall be deemed just in the 
premises.'' 15 U.S.C. Sec. 25 (2014). Section 15, however, does not 
specify a standard for determining when to grant a preliminary 
injunction. Therefore, a modified version of the general test for 
preliminary injunctions applies. The test is usually articulated as 
requiring that the government show a reasonable likelihood of success 
on the merits and that the balance of equities tips in its favor. See, 
e.g., U.S. v. Siemens Corp., 621 F.2d 499, 505 (2d Cir. 1980).
    \43\FTC Act section 13(b) requires a court to grant a preliminary 
injunction to the FTC upon ``a proper showing that, weighing the 
equities and considering the Commission's likelihood of ultimate 
success, such action would be in the public interest.'' 15 U.S.C. 
Sec. 53(b) (2014). Courts have interpreted this standard to mean that 
the FTC must raise questions that are ``so serious, substantial, 
difficult and doubtful as to make them fair ground for thorough 
investigation.'' FTC v. H.J. Heinz Co., 246 F.3d 708, 714-15 (D.C. Cir. 
2001).
    \44\See, e.g., AMC Report at 141 (noting the view of Commissioners 
Garza, Jacobson, and Kempf that the standard is the same and that such 
legislation is not truly necessary).
---------------------------------------------------------------------------
    We agree with the points raised by AAI regarding the 
preliminary injunction standards applicable to the FTC and the 
DOJ. First, AAI noted that the differences in the preliminary 
injunction standards did not matter ``in any material sense 
since courts generally require both agencies to make strong 
showings of probably anticompetitive effect before a 
preliminary injunction is entered. . .  .''\45\ It further 
argued that:
---------------------------------------------------------------------------
    \45\AAI Letter at para. 1.

        Assuming this difference does matter, however, SMARTER 
        Act supporters prematurely jump to the conclusion that 
        the correct solution to this ``unfairness'' is to 
        subject FTC challenges to the tougher standard 
        applicable to DOJ. Why is it not better from a public 
        policy standpoint to address the anomaly by extending 
        the benefit of the Section 13(b) standard to DOJ 
        challenges? A deferential standard for both agencies is 
        warranted by the expertise and sophistication of the 
        merger review process at both agencies. . .  .\46\
---------------------------------------------------------------------------
    \46\Id.

    Similarly, Professor Kirkwood testified that equalizing the 
FTC and DOJ preliminary injunction standards was not necessary 
because both standards function the same way as a practical 
matter.\47\ He did, however, express the concern that changing 
the preliminary injunction standard applicable to the FTC in 
merger cases could have unintended consequences, like causing 
courts to apply the non-FTC standard in non-merger cases as 
well. He also testified that the FTC Act standard, to the 
extent that it really was substantively more favorable to the 
government than the one applicable to the DOJ, was designed to 
allow the FTC to use its administrative proceedings.\48\
---------------------------------------------------------------------------
    \47\Kirkwood Statement at 3.
    \48\Id at 4-5. We further note that H.R. 5402 does not guarantee 
independent litigating authority for the FTC in preliminary injunction 
proceedings, thereby further undermining the FTC's independence.
---------------------------------------------------------------------------

                               CONCLUSION

    This year marks the 100th anniversary of the establishment 
of the FTC, an agency specifically created by Congress to 
strengthen the enforcement of antitrust law in order to better 
protect the American consumer. Congress intended the agency to 
be a vigorous enforcer of the law and to develop antitrust 
policy in a bipartisan and expert manner while being 
comparatively insulated from the changing political and 
economic priorities that occur with each new presidential 
administration. A hallmark of this independence, and a key tool 
in support of its mission and of its independent status, is the 
FTC's ability to pursue administrative adjudication, including 
in merger enforcement cases. By prohibiting the agency from 
exercising this authority in merger cases, H.R. 5402 ultimately 
strikes at the very heart of the rationale for the FTC's 
existence and directly contravenes Congress's intent in 
establishing the FTC a century ago. Whatever the potential 
benefits for business in terms of lowered costs and 
uncertainty, undermining the FTC's independence and 
distinctiveness jeopardizes the agency's ability to protect 
consumers.
    We are additionally concerned that H.R. 5402 goes well 
beyond the recommendations of the AMC. In particular, the 
elimination of administrative adjudication authority would also 
apply to certain non-merger conduct, including joint ventures 
and ``similar'' transactions.
    Finally, the bill's uniform preliminary injunction standard 
for merger cases appears to be a solution in search of a 
problem. Most observers concur that whatever differences in 
their articulation, such differences would not change the 
outcomes in any given case. Nonetheless, to the extent that 
there is a material difference, and to the extent that the FTC 
Act standard is, in fact, more favorable to enforcement 
authorities, as H.R. 5402's proponents contend, H.R. 5402 
chooses the less consumer-protective standard.
    For the foregoing reasons, we urge our colleagues to oppose 
H.R. 5402.

                                   John Conyers, Jr.
                                   Zoe Lofgren.
                                   Sheila Jackson Lee.
                                   Henry C. ``Hank'' Johnson, Jr.
                                   Judy Chu.
                                   Karen Bass.
                                   Cedric Richmond.
                                   David N. Cicilline.
```