```

[House Report 114-449]
[From the U.S. Government Publishing Office]

114th Congress   }                                        {     Report
                        HOUSE OF REPRESENTATIVES
 2d Session      }                                        {    114-449

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

 
STANDARD MERGER AND ACQUISITION REVIEWS THROUGH EQUAL RULES ACT OF 2015

                                _______
                                

 March 14, 2016.--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. 2745]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2745) 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, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................     6
Committee Consideration..........................................     6
Committee Votes..................................................     6
Committee Oversight Findings.....................................     7
New Budget Authority and Tax Expenditures........................     8
Congressional Budget Office Cost Estimate........................     8
Duplication of Federal Programs..................................     9
Disclosure of Directed Rule Makings..............................     9
Performance Goals and Objectives.................................     9
Advisory on Earmarks.............................................    10
Section-by-Section Analysis......................................    10
Changes in Existing Law Made by the Bill, as Reported............    11
Dissenting Views.................................................    35

                          Purpose and Summary

    H.R. 2745, the ``Standard Merger and Acquisition Reviews 
Through Equal Rules Act of 2015,'' 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 in 
Federal court, 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 and not affect the judicial remedies 
available to address such transactions.

                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 in 1903, and the Antitrust 
Division became a separate operating unit within DOJ thirty 
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 
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 it has 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 behind 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. When the FTC seeks 
to prevent the consummation of a proposed transaction, it will 
file simultaneously an administrative complaint that initiates 
the administrative litigation process and, because the 
administrative complaint does not by itself prevent the 
consummation of the transaction, a preliminary injunction 
request in Federal court. Ostensibly, the preliminary 
injunction is to preclude the parties from closing the 
transaction while the administrative litigation is pending. 
Absent such a request, the parties to the transaction 
theoretically could consummate the transaction and continue 
with their administrative litigation at the FTC. If the parties 
lose their case, they would face the prospect of having their 
transaction unwound. In contrast, DOJ does not have the 
authority to conduct administrative litigation.

   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.\13\ 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 improvement 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.
---------------------------------------------------------------------------
    \13\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.\14\
---------------------------------------------------------------------------
    \14\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.\15\ 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.''\16\
---------------------------------------------------------------------------
    \15\AMC Report, at 142 (2007).
    \16\Id.
---------------------------------------------------------------------------

                         E. RECENT FTC ACTIONS

    On March 13, 2015, the FTC announced that it was re-
adopting a rule created in 1995, often referred to as the 
``Pitofsky Rule'' after the FTC Chairman at the time.\17\ In 
brief, the Pitofsky Rule provides that if the FTC is 
unsuccessful in obtaining a preliminary injunction against a 
proposed transaction in Federal court, it will not 
automatically proceed to continue to block the transaction 
through administrative litigation. Rather, the FTC will review 
each matter on a case-by-case basis and determine whether 
proceeding to administrative litigation is warranted. 
Additionally, the Pitofsky Rule provides for the automatic stay 
of the pending administrative litigation following the denial 
of the preliminary injunction request in Federal court.
---------------------------------------------------------------------------
    \17\FTC, Commission Approves Revisions to Its Rules of Practice 
(Mar. 13, 2015), https://www.ftc.gov/news-events/press-releases/2015/
03/commission-approves-revisions-its-rules-practice; Administrative 
Litigation Following the Denial of a Preliminary Injunction: Policy 
Statement, 60 Fed. Reg. 39,741 (1995).
---------------------------------------------------------------------------
    In 2009, the FTC repealed the component of the Pitofsky 
Rule that provided for the automatic stay of the administrative 
litigation.\18\ The latest FTC action reinstates the automatic 
stay component of the Pitofsky Rule. To be clear, the FTC still 
retains the ability to continue administrative litigation 
following the denial of a preliminary injunction request; and, 
the Pitofsky Rule may be repealed in whole, or in part, by a 
Commission vote. Notably, the Pitofsky Rule predates the AMC 
Report.
---------------------------------------------------------------------------
    \18\Debbie Feinstein, Changes to Commission Rule 3.26 re: Part 3 
Proceedings Following Federal Court Denial of a Preliminary Injunction, 
FTC (Mar. 16, 2015), https://www.ftc.gov/news-events/blogs/competition-
matters/2015/03/changes-commission-rule-326-re-part-3-proceedings.
---------------------------------------------------------------------------

                           F. THE SMARTER ACT

    The SMARTER Act incorporates certain 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.\19\
---------------------------------------------------------------------------
    \19\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 June 16, 2015, the Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law conducted a hearing on the SMARTER 
Act. The witnesses at the hearing were: Deborah Garza, Esq., 
Partner, Covington & Burling LLP, former Chairwoman of the 
Antitrust Modernization Commission, and former Acting Assistant 
Attorney General of the Department of Justice; David Clanton, 
Esq., Senior Counsel, Baker & McKenzie LLP, former 
Commissioner, and former acting Chairman 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, Albert A. 
Foer, Esq., founder and former president of the American 
Antitrust Institute.
    Three of the four witnesses testified in support of the 
same preliminary injunction standard being applied to both 
antitrust enforcement agencies. Additionally, these same three 
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. The Minority witness testified that he believed there 
was not significant cause to amend the law.
    During the 113th Congress, the Subcommittee on Regulatory 
Reform, Commercial and Antitrust Law conducted a hearing on a 
discussion draft of the SMARTER Act. The testimony provided at 
this hearing similarly supported harmonizing the preliminary 
injunction standard and removing the FTC's ability to pursue 
administrative litigation solely in the context of merger 
reviews.

                        Committee Consideration

    On September 30, 2015, the Committee met in open session 
and ordered the bill H.R. 2745 favorably reported, without 
amendment, by a vote of 18-10, 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 the 
following rollcall votes occurred during the Committee's 
consideration of H.R. 2745:
    1. Motion to report H.R. 2745 favorably to the House of 
Representatives. Agreed to by a vote of 18 ayes to 10 noes.

                             ROLLCALL NO. 1
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................      X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX).................................
Mr. Chabot (OH)................................      X
Mr. Issa (CA)..................................      X
Mr. Forbes (VA)................................      X
Mr. King (IA)..................................      X
Mr. Franks (AZ)................................      X
Mr. Gohmert (TX)...............................      X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................      X
Mr. Chaffetz (UT)..............................      X
Mr. Marino (PA)................................      X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................
Mr. Farenthold (TX)............................      X
Mr. Collins (GA)...............................      X
Mr. DeSantis (FL)..............................
Ms. Walters (CA)...............................      X
Mr. Buck (CO)..................................      X
Mr. Ratcliffe (TX).............................      X
Mr. Trott (MI).................................      X
Mr. Bishop (MI)................................      X
 
Mr. Conyers, Jr. (MI), Ranking Member..........              X
Mr. Nadler (NY)................................
Ms. Lofgren (CA)...............................              X
Ms. Jackson Lee (TX)...........................              X
Mr. Cohen (TN).................................              X
Mr. Johnson (GA)...............................              X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................              X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................              X
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................              X
Mr. Jeffries (NY)..............................              X
Mr. Cicilline (RI).............................              X
Mr. Peters (CA)................................      X
                                                ------------------------
    Total......................................     18      10
------------------------------------------------------------------------

                      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. 2745, 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, October 16, 2015.
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. 2745, the 
``Standard Merger and Acquisition Reviews Through Equal Rules 
Act of 2015.''
    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,
                                                Keith Hall,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member

H.R. 2745--Standard Merger and Acquisition Reviews Through Equal Rules 
                              Act of 2015.

      As ordered reported by the House Committee on the Judiciary 
                         on September 30, 2015.

    CBO estimates that implementing H.R. 2745 would not have a 
significant effect on discretionary spending. Enacting H.R. 
2745 would not affect direct spending or revenues; therefore, 
pay-as-you-go procedures do not apply.
    CBO estimates that enacting H.R. 2745 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2026.
    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 the two 
agencies exercise that authority is different. H.R. 2745 would 
amend the Clayton Act and the Federal Trade Commission Act to 
align certain procedures followed by the FTC when it reviews a 
proposed merger or acquisition with the procedures 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; and

         LDirect the FTC to resolve certain contested 
        mergers or acquisitions through a Federal court rather 
        than through administrative litigation.

    CBO expects that the FTC's efforts to prepare for and 
litigate a contested merger in Federal court using the 
harmonized standard specified in H.R. 2745 would not require a 
significant increase in staffing levels. Over the past five 
years, the FTC has filed eight preliminary injunctions in 
Federal court. Based on information from the agency, CBO 
expects that volume to remain relatively constant over the next 
five years.
    Similarly, the FTC approved, on average, fewer than 15 
agreements related to proposed mergers over the past five 
years. Under H.R. 2745, 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. 2745, CBO 
estimates 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. 2745 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 H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 2745 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. 2745 specifically directs 
to be completed no specific rule makings within the meaning of 
Sec. 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. 
2745 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. 2745 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 2015.''
Section 2. Amendments to the Clayton Act.
    Sec. 2(1): Section 4F of the Clayton Act provides that the 
Attorney General must notify state attorneys general of any 
antitrust action in which the Attorney General 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.
    Sec. 2(2)(A): Section 5(a) of the Clayton Act 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.
    Section 2(2)(B): Section 5(i) of the Clayton Act 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.
    Section 2(3): Section 11 of the Clayton Act 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. Section 11 also provides the 
FTC with the authority to prosecute violations of the Clayton 
Act through the FTC administrative litigation process. The 
SMARTER Act amends the Clayton Act to exclude the FTC's 
enforcement of Section 7 from these separate procedures, which 
ensures that the FTC's Section 7 enforcement procedures will be 
identical to the procedures applicable to the Attorney General. 
Additionally, the SMARTER Act includes clarifying language that 
the FTC may still enter into Section 7 consent decrees with 
parties to the proposed transaction.
    Section 2(4): Section 13 of the Clayton Act allows the 
United States to issue 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.
    Section 2(5): Section 15 of the Clayton Act provides that 
it is the duty of the United States district attorneys, under 
the direction of the Attorney General, to institute antitrust 
lawsuits whereby they may seek temporary restraining orders or 
other remedies against the offensive conduct. The SMARTER Act 
amends this section to extend the duty to initiate lawsuits to 
the FTC.
Section 3. Amendments to the FTC Act.
    Section 3(1): Section 5 of the FTC Act 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 preclude the FTC from 
initiating an administrative proceeding against a proposed 
transaction.
    Section 3(2): Section 9 of the FTC Act, in the paragraph to 
be amended, 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.''
    Section 3(3): Section 13(b) of the FTC Act 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 3(4): Section 20(c)(1) of the FTC Act provides 
authority to the FTC to issue subpoenas and take depositions. 
The SMARTER Act amends this section to clarify that the FTC 
also has this authority when prosecuting Section 7 cases.
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 (existing law 
proposed to be omitted is enclosed in black brackets, 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

    [Sec. 4F. (a) Whenever the Attorney General of the United 
States has brought an action under the antitrust laws, and he 
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 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 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. 4F. ACTIONS BY ATTORNEY GENERAL OF THE UNITED STATES OR THE 
                    FEDERAL TRADE COMMISSION.

    (a) Whenever the Attorney General of the United States has 
brought an action under the antitrust laws or the Federal Trade 
Commission has brought an action under section 7, and the 
Attorney General or Federal Trade Commission, as applicable, 
has reason to believe that any State attorney general would be 
entitled to bring an action under this Act based substantially 
on the same alleged violation of the antitrust laws or section 
7, the Attorney General or Federal Trade Commission, as 
applicable, shall promptly give written notification thereof to 
such State attorney general.
    (b) To assist a State attorney general in evaluating the 
notice described in subsection (a) or in bringing any action 
under this Act, the Attorney General of the United States or 
Federal Trade Commission, as applicable, shall, upon request by 
such State attorney general, make available to the State 
attorney general, to the extent permitted by law, any 
investigative files or other materials which are or may be 
relevant or material to the actual or potential cause of action 
under this Act.

           *       *       *       *       *       *       *

    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 under the antitrust laws 
(including a proceeding brought by the Federal Trade Commission 
with respect to a violation of section 7) 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 for entry in any civil proceeding brought by or 
on behalf of the United States under the antitrust laws shall 
be filed with the district court before which such proceeding 
in pending and published by the United States 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 thereto, shall also be filed 
with such district court and published by the United States in 
the Federal Register within such sixty-day period. Copies of 
such proposal and any other materials and documents which the 
United States 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 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) the nature and purpose of the proceeding;
            (2) a description of the practices or events giving 
        rise to the alleged violation of the antitrust laws;
            (3) an explanation of the proposal for a consent 
        judgment, including an explanation of any unusual 
        circumstances giving rise to such proposal or any 
        provision contained therein, relief to be obtained 
        thereby, and the anticipated effects on competition of 
        such relief;
            (4) the remedies available to potential private 
        plaintiffs damaged by the alleged violation in the 
        event that such proposal for the consent judgment is 
        entered in such proceeding;
            (5) a description of the procedures available for 
        modification of such proposal; and
            (6) a description and evaluation of alternatives to 
        such proposal actually considered by the United States.
    (c) the United States 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) a summary of the terms of the proposal for the 
        consent judgment,
            (ii) a summary of the competitive impact statement 
        filed under subsection (b),
            (iii) and a list of the materials and documents 
        under subsection (b) which the United States 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 
may request and the court may grant, the United States 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 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, 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 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) the competitive impact of such judgment, 
        including termination of alleged violations, provisions 
        for enforcement and modification, duration of relief 
        sought, anticipated effects of alternative remedies 
        actually considered, whether its terms are ambiguous, 
        and any other competitive considerations bearing upon 
        the adequacy of such judgment that the court deems 
        necessary to a determination of whether the consent 
        judgment is in the public interest; and
            (B) the impact of entry of such judgment upon 
        competition in the relevant market or markets, upon the 
        public generally and individuals alleging specific 
        injury from the violations set forth in the complaint 
        including consideration of the public benefit, if any, 
        to be derived from a determination of the issues at 
        trial.
    (2) Nothing in this section shall be construed to require 
the court to conduct an evidentiary hearing or to require the 
court to permit anyone to intervene.
    (f) In making its determination under subsection (e), the 
court may--
            (1) take testimony of Government officials or 
        experts or such other expert witnesses, upon motion of 
        any party or participant or upon its own motion, as the 
        court may deem appropriate;
            (2) appoint a special master and such outside 
        consultants or expert witnesses as the court may deem 
        appropriate; and request and obtain the views, 
        evaluations, or advice of any individual, group or 
        agency of government with respect to any aspects of the 
        proposed judgment or the effect of such judgment, in 
        such manner as the court deems appropriate;
            (3) authorize full or limited participation in 
        proceedings before the court by interested persons or 
        agencies, including appearance amicus curiae, 
        intervention as a party pursuant to the Federal Rules 
        of Civil Procedure, examination of witnesses or 
        documentary materials, or participation in any other 
        manner and extent which serves the public interest as 
        the court may deem appropriate.
            (4) review any comments including any objections 
        filed with the United States under subsection (d) 
        concerning the proposed judgment and the responses of 
        the United States to such comments and objections; and
            (5) take such other action in the public interest 
        as the court may deem appropriate.
    (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 
concerning or relevant to such proposal, except that any such 
communications made by counsel of record alone with the 
Attorney General or the employees of the Department of Justice 
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.
    (h) Proceedings before the district court under subsections 
(e) and (f) of this section, and the competitive impact 
statement filed under subsection (b) of this section, shall not 
be admissible against any defendant in any action or proceeding 
brought by any other party against such defendant under the 
antitrust laws or by the United States under section 4A of this 
Act nor constitute a basis for the introduction of the consent 
judgment as prima facie evidence against such defendant in any 
such action or proceeding.
    (i) Whenever any civil or criminal proceeding is instituted 
by the United States to prevent, restrain, or punish violations 
of any of the antitrust laws (including a proceeding instituted 
by the Federal Trade Commission with respect to a violation of 
section 7), 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 to be exercised 
as follows:
    (b) Whenever the Commission, Board, or Secretary vested 
with jurisdiction thereof shall have reason to believe that any 
person is violating or has violated any of the provisions of 
sections 2, 3, 7, and 8 of this Act, it shall issue and serve 
upon such person and the Attorney General 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 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, Board, or Secretary requiring such person to 
cease and desist from the violation of the law so charged in 
said complaint. The Attorney General shall have the right to 
intervene and appear in said proceeding and any person may make 
application, and upon good cause shown may be allowed by the 
Commission, Board, or Secretary, 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, Board, or Secretary. If upon such 
hearing the Commission, Board, or Secretary, as the case may 
be, shall be of the opinion that any of the provisions of said 
sections have been or are being violated, 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 an order requiring such person to cease and desist from 
such violations, and divest itself of the stock, or other share 
capital, or assets, held or rid itself of the directors chosen 
contrary to the provisions of sections 7 and 8 of this Act, if 
any there be, in the manner and within the time fixed by said 
order. 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, Board, or Secretary 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, Board, or Secretary 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, Board, or Secretary conditions of 
fact or of law have so changed as to require such action or if 
the public interest shall so require: Provided, however, That 
the said person 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 court of appeals of 
the United States, in the manner provided in subsection (c) of 
this section.
    (c) Any person required by such order of the commission, 
board, or Secretary to cease and desist from any such violation 
may obtain a review of such order in the court of appeals of 
the United States for any circuit within which such violation 
occurred or within which such person resides or carries on 
business, by filing in the court, within sixty days after the 
date of the service of such order, a written petition praying 
that the order of the commission, board, or Secretary be set 
aside. A copy of such petition shall be forthwith transmitted 
by the clerk of the court to the commission, board, or 
Secretary, and thereupon the commission, board, or Secretary 
shall file in the court the record in the proceeding, as 
provided in section 2112 of title 28, United States Code. Upon 
such filing of the petition the court shall have jurisdiction 
of the proceeding and of the question determined therein 
concurrently with the commission, board, or Secretary until the 
filing of the record, and shall have power to make and enter a 
decree affirming, modifying, or setting aside the order of the 
commission, board, or Secretary, and enforcing the same to the 
extent that such order is affirmed, and to issue such writs as 
are ancillary to its jurisdiction or are necessary in its 
judgment to prevent injury to the public or to competitors 
pendente lite. The findings of the commission, board, or 
Secretary as to the facts, if supported by substantial 
evidence, shall be conclusive. To the extent that the order of 
the commission, board, or Secretary is affirmed, the court 
shall issue its own order commanding obedience to the terms of 
such order of the commission, board, or Secretary. If either 
party shall apply to the court for leave to adduce additional 
evidence, and shall show to the satisfaction of the court that 
such additional evidence is material and that there were 
reasonable grounds for the failure to adduce such evidence in 
the proceeding before the commission, board, or Secretary, the 
court may order such additional evidence to be taken before the 
commission, board, or Secretary, and to be adduced upon the 
hearing in such manner and upon such terms and conditions as to 
the court may seem proper. The commission, board, or Secretary 
may modify its findings as to the facts, or make new findings, 
by reason of the additional evidence so taken, and shall file 
such modified or new findings, which, if supported by 
substantial evidence, shall be conclusive, and its 
recommendation, if any, for the modification or setting aside 
of its original order, with the return of such additional 
evidence. The judgment and decree of the court shall be final, 
except that the same shall be subject to review by the Supreme 
Court upon certiorari, as provided in section 1254 of title 28 
of the United States Code.
    (d) Upon the filing of the record with it the jurisdiction 
of the court of appeals to affirm, enforce, modify, or set 
aside orders of the commission, board, or Secretary shall be 
exclusive.
    (e) No order of the commission, board, or Secretary or 
judgment of the court to enforce the same shall in anywise 
relieve or absolve any person from any liability under the 
antitrust laws.
    (f) Complaints, orders, and other processes of the 
commission, board, or Secretary under this section may be 
served by anyone duly authorized by the commission, board, or 
Secretary, either (1) by delivering a copy thereof to the 
person to be served, or to a member of the partnership to be 
served, or to the president, secretary, or other executive 
officer or a director of the corporation to be served; or (2) 
by leaving a copy thereof at the residence or the principal 
office or place of business of such person; or (3) by mailing 
by registered or certified mail a copy thereof addressed to 
such person at his or its residence or principal office or 
place of business. The verified return by the person so serving 
said complaint, order, or other process setting forth the 
manner of said service shall be proof of the same, and the 
return post office receipt for said complaint, order, or other 
process mailed by registered or certified mail as aforesaid 
shall be proof of the service of the same.
    (g) Any order issued under subsection (b) shall become 
final--
            (1) upon the expiration of the time allowed for 
        filing a petition for review, if no such petition has 
        been duly filed within such time; but the commission, 
        board, or Secretary may thereafter modify or set aside 
        its order to the extent provided in the last sentence 
        of subsection (b); or
            (2) upon the expiration of the time allowed for 
        filing a petition for certiorari, if the order of the 
        commission, board, or Secretary has been affirmed, or 
        the petition for review has been dismissed by the court 
        of appeals, and no petition for certiorari has been 
        duly filed; or
            (3) upon the denial of a petition for certiorari, 
        if the order of the commission, board, or Secretary has 
        been affirmed or the petition for review has been 
        dismissed by the court of appeals; or
            (4) upon the expiration of thirty days from the 
        date of issuance of the mandate of the Supreme Court, 
        if such Court directs that the order of the commission, 
        board, or Secretary be affirmed or the petition for 
        review be dismissed.
    (h) If the Supreme Court directs that the order of the 
commission, board, or Secretary be modified or set aside, the 
order of the commission, board, or Secretary rendered in 
accordance with the mandate of the Supreme Court shall become 
final upon the expiration of thirty days from the time it was 
rendered, unless within such thirty days either party has 
instituted proceedings to have such order corrected to accord 
with the mandate, in which event the order of the commission, 
board, or Secretary shall become final when so corrected.
    (i) If the order of the commission, board, or Secretary is 
modified or set aside by the court of appeals, and if (1) the 
time allowed for filing a petition for certiorari has expired 
and no such petition has been duly filed, or (2) the petition 
for certiorari has been denied, or (3) the decision of the 
court has been affirmed by the Supreme Court, then the order of 
the commission, board, or Secretary rendered in accordance with 
the mandate of the court of appeals shall become final on the 
expiration of thirty days from the time such order of the 
commission, board, or Secretary was rendered, unless within 
such thirty days either party has instituted proceedings to 
have such order corrected so that it will accord with the 
mandate, in which event the order of the commission, board, or 
Secretary shall become final when so corrected.
    (j) If the Supreme Court orders a rehearing; or if the case 
is remanded by the court of appeals to the commission, board, 
or Secretary for a rehearing, and if (1) the time allowed for 
filing a petition for certiorari has expired, and no such 
petition has been duly filed, or (2) the petition for 
certiorari has been denied, or (3) the decision of the court 
has been affirmed by the Supreme Court, then the order of the 
commission, board, or Secretary rendered upon such rehearing 
shall become final in the same manner as though no prior order 
of the commission, board, or Secretary had been rendered.
    (k) As used in this section the term ``mandate'', in case a 
mandate has been recalled prior to the expiration of thirty 
days from the date of issuance thereof, means the final 
mandate.
    (l) Any person who violates any order issued by the 
commission, board, or Secretary under subsection (b) after such 
order has become final, and while such order is in effect, 
shall forfeit and pay to the United States a civil penalty of 
not more than $5,000 for each violation, which shall accrue to 
the United States and may be recovered in a civil action 
brought by the United States. Each separate violation of any 
such order shall be a separate offense, except that in the case 
of a violation through continuing failure or neglect to obey a 
final order of the commission, board, or Secretary each day of 
continuance of such failure or neglect shall be deemed a 
separate offense.
    (m)(1) Except as provided in paragraph (2), in enforcing 
compliance with section 7, the Federal Trade Commission shall 
enforce compliance with that section in the same manner as the 
Attorney General in accordance with section 15.
    (2) If the Federal Trade Commission approves an agreement 
with the parties to the transaction that contains a consent 
order with respect to a violation of section 7, the Commission 
shall enforce compliance with that section in accordance with 
this section.

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    Sec. 13. That in any suit, action, or proceeding brought by 
or on behalf of the United States (including a suit, action, or 
proceeding brought by 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)(1) Unfair methods of competition in or 
affecting commerce, and unfair or deceptive acts or practices 
in or affecting commerce, are hereby declared unlawful.
    (2) The Commission is hereby empowered and directed to 
prevent persons, partnerships, or corporations, except banks, 
savings and loan institutions described in section 18(f)(3), 
Federal credit unions described in section 18(f)(4), common 
carriers subject to the Acts to regulate commerce, air carriers 
and foreign air carriers subject to the Federal Aviation Act of 
1958, and persons, partnerships, or corporations insofar as 
they are subject to the Packers and Stockyards Act, 1921, as 
amended, except as provided in section 406(b) of said Act, from 
using unfair methods of competition in or affecting commerce 
and unfair or deceptive acts or practices in or affecting 
commerce.
    (3) This subsection shall not apply to unfair methods of 
competition involving commerce with foreign nations (other than 
import commerce) unless--
            (A) such methods of competition have a direct, 
        substantial, and reasonably foreseeable effect--
                    (i) on commerce which is not commerce with 
                foreign nations, or on import commerce with 
                foreign nations; or
                    (ii) on export commerce with foreign 
                nations, of a person engaged in such commerce 
                in the United States; and
            (B) such effect gives rise to a claim under the 
        provisions of this subsection, other than this 
        paragraph.
If this subsection applies to such methods of competition only 
because of the operation of subparagraph (A)(ii), this 
subsection shall apply to such conduct only for injury to 
export business in the United States.
            (4)(A) For purposes of subsection (a), the term 
        ``unfair or deceptive acts or practices'' includes such 
        acts or practices involving foreign commerce that--
                    (i) cause or are likely to cause reasonably 
                foreseeable injury within the United States; or
                    (ii) involve material conduct occurring 
                within the United States.
            (B) All remedies available to the Commission with 
        respect to unfair and deceptive acts or practices shall 
        be available for acts and practices described in this 
        paragraph, including restitution to domestic or foreign 
        victims.
    (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 that is subject to section 7 of the 
Clayton Act (15 U.S.C. 18), except in cases where the 
Commission approves an agreement with the parties to the 
transaction that contains a consent order) 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 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 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.
    (c) Any person, partnership, or corporation required by an 
order of the Commission to cease and desist from using any 
method of competition or act or practice may obtain a review of 
such order in the circuit court of appeals of the United 
States, within any circuit where the method of competition or 
the act or practice in question was used or where such person, 
partnership, or corporation resides or carries on business, by 
filing in the court, within sixty days from the date of the 
service of such order, a written petition praying that the 
order of the Commission be set aside. A copy of such petition 
shall be forthwith transmitted by the clerk of the court to the 
Commission, and thereupon the Commission shall file in the 
court the record in the proceeding, as provided in section 2112 
of title 28, United States Code. Upon such filing of the 
petition the court shall have jurisdiction of the proceeding 
and of the question determined therein concurrently with the 
Commission until the filing of the record and shall have power 
to make and enter a decree affirming, modifying, or setting 
aside the order of the Commission, and enforcing the same to 
the extent that such order is affirmed and to issue such writs 
as are ancillary to its jurisdiction or are necessary in its 
judgment to prevent injury to the public or to competitors 
pendente lite. The findings of the Commission as to the facts, 
if supported by evidence, shall be conclusive. To the extent 
that the order of the Commission is affirmed, the court shall 
thereupon issue its own order commanding obedience to the terms 
of such order of the Commission. If either party shall apply to 
the court for leave to adduce additional evidence, and shall 
show to the satisfaction of the court that such additional 
evidence is material and that there were reasonable grounds for 
the failure to adduce such evidence in the proceeding before 
the Commission, the court may order such additional evidence to 
be taken before the Commission and to be adduced upon the 
hearing in such manner and upon such terms and conditions as to 
the court may seem proper. The Commission may modify its 
findings as to the facts, or make new findings, by reason of 
the additional evidence so taken, and it shall file such 
modified or new findings, which if supported by evidence, shall 
be conclusive, and its recommendation, if any, for the 
modification or setting aside of its original order, with the 
return of such additional evidence. The judgment and decree of 
the court shall be final, except that the same shall be subject 
to review by the Supreme Court upon certiorari, as provided in 
section 240 of the Judicial Code.
    (d) Upon the filing of the record with it the jurisdiction 
of the court of appeals of the United States to affirm, 
enforce, modify, or set aside orders of the Commission shall be 
exclusive.
    (e) No order of the Commission or judgment of court to 
enforce the same shall in anywise relieve or absolve any 
person, partnership, or corporation from any liability under 
the Antitrust Acts.
    (f) Complaints, orders, and other processes of the 
Commission under this section may be served by anyone duly 
authorized by the Commission, either (a) by delivering a copy 
thereof to the person to be served, or to a member of the 
partnership to be served, or the president, secretary, or other 
executive officer or a director of the corporation to be 
served; or (b) by leaving a copy thereof at the residence or 
the principal office or place of business of such person, 
partnership, or corporation; or (c) by mailing a copy thereof 
by registered mail or by certified mail addressed to such 
person, partnership, or corporation at his or its residence or 
principal office or place of business. The verified return by 
the person so serving said complaint, order, or other process 
setting forth the manner of said service shall be proof of the 
same, and the return post office receipt for said complaint, 
order, or other process mailed by registered mail or certified 
mail as aforesaid shall be proof of the service of the same.
    (g) An order of the Commission to cease and desist shall 
become final--
            (1) Upon the expiration of the time allowed for 
        filing a petition for review, if no such petition has 
        been duly filed within such time; but the Commission 
        may thereafter modify or set aside its order to the 
        extent provided in the last sentence of subsection (b).
            (2) Except as to any order provision subject to 
        paragraph (4), upon the sixtieth day after such order 
        is served, if a petition for review has been duly 
        filed; except that any such order may be stayed, in 
        whole or in part and subject to such conditions as may 
        be appropriate, by--
                    (A) the Commission;
                    (B) an appropriate court of appeals of the 
                United States, if (i) a petition for review of 
                such order is pending in such court, and (ii) 
                an application for such a stay was previously 
                submitted to the Commission and the Commission, 
                within the 30-day period beginning on the date 
                the application was received by the Commission, 
                either denied the application or did not grant 
                or deny the application; or
                    (C) the Supreme Court, if an applicable 
                petition for certiorari is pending.
            (3) For purposes of subsection (m)(1)(B) and of 
        section 19(a)(2), if a petition for review of the order 
        of the Commission has been filed--
                    (A) upon the expiration of the time allowed 
                for filing a petition for certiorari, if the 
                order of the Commission has been affirmed or 
                the petition for review has been dismissed by 
                the court of appeals and no petition for 
                certiorari has been duly filed;
                    (B) upon the denial of a petition for 
                certiorari, if the order of the Commission has 
                been affirmed or the petition for review has 
                been dismissed by the court of appeals; or
                    (C) upon the expiration of 30 days from the 
                date of issuance of a mandate of the Supreme 
                Court directing that the order of the 
                Commission be affirmed or the petition for 
                review be dismissed.
            (4) In the case of an order provision requiring a 
        person, partnership, or corporation to divest itself of 
        stock, other share capital, or assets, if a petition 
        for review of such order of the Commission has been 
        filed--
                    (A) upon the expiration of the time allowed 
                for filing a petition for certiorari, if the 
                order of the Commission has been affirmed or 
                the petition for review has been dismissed by 
                the court of appeals and no petition for 
                certiorari has been duly filed;
                    (B) upon the denial of a petition for 
                certiorari, if the order of the Commission has 
                been affirmed or the petition for review has 
                been dismissed by the court of appeals; or
                    (C) upon the expiration of 30 days from the 
                date of issuance of a mandate of the Supreme 
                Court directing that the order of the 
                Commission be affirmed or the petition for 
                review be dismissed.
    (h) If the Supreme Court directs that the order of the 
Commission be modified or set aside, the order of the 
Commission rendered in accordance with the mandate of the 
Supreme Court shall become final upon the expiration of thirty 
days from the time it was rendered, unless within such thirty 
days either party has instituted proceedings to have such order 
corrected to accord with the mandate, in which event the order 
of the Commission shall become final when so corrected.
    (i) If the order of the Commission is modified or set aside 
by the circuit court of appeals, and if (1) the time allowed 
for filing a petition for certiorari has expired and no such 
petition has been duly filed, or (2) the petition for 
certiorari has been denied, or (3) the decision of the court 
has been affirmed by the Supreme Court, then the order of the 
Commission rendered in accordance with the mandate of the 
circuit court of appeals shall become final on the expiration 
of thirty days from the time such order of the Commission was 
rendered, unless within such thirty days either party has 
instituted proceedings to have such order corrected so that it 
will accord with the mandate, in which event the order of the 
Commission shall become final when so corrected.
    (j) If the Supreme Court orders a rehearing; or if the case 
is remanded by the circuit court of appeals to the Commission 
for a rehearing, and if (1) the time allowed for filing a 
petition for certiorari has expired, and no such petition has 
been duly filed, or (2) the petition for certiorari has been 
denied, or (3) the decision of the court has been affirmed by 
the Supreme Court, then the order of the Commission rendered 
upon such rehearing shall become final in the same manner as 
though no prior order of the Commission had been rendered.
    (k) As used in this section the term ``mandate'', in case a 
mandate has been recalled prior to the expiration of thirty 
days from the date of issuance thereof, means the final 
mandate.
    (l) Any person, partnership, or corporation who violates an 
order of the Commission after it has become final, and while 
such order is in effect, shall forfeit and pay to the United 
States a civil penalty of not more than $10,000 for each 
violation, which shall accrue to the United States and may be 
recovered in a civil action brought by the Attorney General of 
the United States. Each separate violation of such an order 
shall be a separate offense, except that in the case of a 
violation through continuing failure to obey or neglect to obey 
a final order of the Commission, each day of continuance of 
such failure or neglect shall be deemed a separate offense. In 
such actions, the United States district courts are empowered 
to grant mandatory injunctions and such other and further 
equitable relief as they deem appropriate in the enforcement of 
such final orders of the Commission.
    (m)(1)(A) The Commission may commence a civil action to 
recover a civil penalty in a district court of the United 
States against any person, partnership, or corporation which 
violates any rule under this Act respecting unfair or deceptive 
acts or practices (other than an interpretive rule or a rule 
violation of which the Commission has provided is not an unfair 
or deceptive act or practice in violation of subsection (a)(1)) 
with actual knowledge or knowledge fairly implied on the basis 
of objective circumstances that such act is unfair or deceptive 
and is prohibited by such rule. In such action, such person, 
partnership, or corporation shall be liable for a civil penalty 
of not more than $10,000 for each violation.
    (B) If the Commission determines in a proceeding under 
subsection (b) that any act or practice is unfair or deceptive, 
and issues a final cease and desist order, other than a consent 
order, with respect to such act or practice, then the 
Commission may commence a civil action to obtain a civil 
penalty in a district court of the United States against any 
person, partnership, or corporation which engages in such act 
or practice--
            (1) after such cease and desist order becomes final 
        (whether or not such person, partnership, or 
        corporation was subject to such cease and desist 
        order), and
            (2) with actual knowledge that such act or practice 
        is unfair or deceptive and is unlawful under subsection 
        (a)(1) of this section.
                In such action, such person, partnership, or 
                corporation shall be liable for a civil penalty 
                of not more than $10,000 for each violation.
    (C)(1) In the case of a violation through continuing 
failure to comply with a rule or with section 5(a)(1), each day 
of continuance of such failure shall be treated as a separate 
violation, for purposes of subparagraphs (A) and (B). In 
determining the amount of such a civil penalty, the court shall 
take into account the degree of culpability, any history of 
prior such conduct, ability to pay, effect on ability to 
continue to do business, and such other matters as justice may 
require.
    (2) If the cease and desist order establishing that the act 
or practice is unfair or deceptive was not issued against the 
defendant in a civil penalty action under paragraph (1)(B) the 
issues of fact in such action against such defendant shall be 
tried de novo. Upon request of any party to such an action 
against such defendant, the court shall also review the 
determination of law made by the Commission in the proceeding 
under subsection (b) that the act or practice which was the 
subject of such proceeding constituted an unfair or deceptive 
act or practice in violation of subsection (a).
    (3) The Commission may compromise or settle any action for 
a civil penalty if such compromise or settlement is accompanied 
by a public statement of its reasons and is approved by the 
court.
    (n) The Commission shall have no authority under this 
section or section 18 to declare unlawful an act or practice on 
the grounds that such act or practice is unfair unless the act 
or practice causes or is likely to cause substantial injury to 
consumers which is not reasonably avoidable by consumers 
themselves and not outweighed by countervailing benefits to 
consumers or to competition. In determining whether an act or 
practice is unfair, the Commission may consider established 
public policies as evidence to be considered with all other 
evidence. Such public policy considerations may not serve as a 
primary basis for such determination.

           *       *       *       *       *       *       *

    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 that is 
subject to section 7 of the Clayton Act (15 U.S.C. 18) that may 
result in any unfair method of competition, the district courts 
of the United States shall have jurisdiction to issue writs of 
mandamus commanding any person or corporation to comply with 
the provisions of this Act or any order of the commission made 
in pursuance thereof.
     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) Whenever the Commission has reason to 
believe--
            (1) that any person, partnership, or corporation is 
        engaged in, or is about to engage in, the dissemination 
        or the causing of the dissemination of any 
        advertisement in violation of section 12, and
            (2) that the enjoining thereof pending the issuance 
        of a complaint by the Commission under section 5, and 
        until such complaint is dismissed by the Commission or 
        set aside by the court on review, or the order of the 
        Commission to cease and desist made thereon has become 
        final within the meaning of section 5, would be to the 
        interest of the public,
the Commission by any of its attorneys designated by it for 
such purpose may bring suit in a district court of the United 
States or in the United States court of any Territory, to 
enjoin the dissemination or the causing of the dissemination of 
such advertisement. Upon proper showing a temporary injunction 
or restraining order shall be granted without bond. Any suit 
may be brought where such person, partnership, or corporation 
resides or transacts business, or wherever venue is proper 
under section 1391 of title 28, United States Code. In 
addition, the court may, if the court determines that the 
interests of justice require that any other person, 
partnership, or corporation should be a party in such suit, 
cause such other person, partnership, or corporation to be 
added as a party without regard to whether venue is otherwise 
proper in the district in which the suit is brought. In any 
suit under this section, process may be served on any person, 
partnership, or corporation wherever it may be found.
    (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 (15 U.S.C. 18) and section 
        5(a)(1) with respect to the consummation of a proposed 
        merger, acquisition, joint venture, or similar 
        transaction that is subject to section 7 of the Clayton 
        Act (15 U.S.C. 18)), and
            (2) that the enjoining thereof pending the issuance 
        of a complaint by the Commission and until such 
        complaint is dismissed by the Commission or set aside 
        by the court on review, or until the order of the 
        Commission made thereon has become final, would be in 
        the interest of the public--
the Commission by any of its attorneys designated by it for 
such purpose may bring suit in a district court of the United 
States to enjoin any such act or practice. 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, and after notice to the defendant, a 
temporary restraining order or a preliminary injunction may be 
granted without bond: Provided, however, That if a complaint is 
not filed within such period (not exceeding 20 days) as may be 
specified by the court after issuance of the temporary 
restraining order or preliminary injunction, the order or 
injunction shall be dissolved by the court and be of no further 
force and effect: Provided further, That in proper cases the 
Commission may seek, and after proper proof, the court may 
issue, a permanent injunction. Any suit may be brought where 
such person, partnership, or corporation resides or transacts 
business, or wherever venue is proper under section 1391 of 
title 28, United States Code. In addition, the court may, if 
the court determines that the interests of justice require that 
any other person, partnership, or corporation should be a party 
in such suit, cause such other person, partnership, or 
corporation to be added as a party without regard to whether 
venue is otherwise proper in the district in which the suit is 
brought. In any suit under this section, process may be served 
on any person, partnership, or corporation wherever it may be 
found.
    (c) Any process of the Commission under this section may be 
served by any person duly authorized by the Commission--
            (1) by delivering a copy of such process to the 
        person to be served, to a member of the partnership to 
        be served, or to the president, secretary, or other 
        executive officer or a director of the corporation to 
        be served;
            (2) by leaving a copy of such process at the 
        residence or the principal office or place of business 
        of such person, partnership, or corporation; or
            (3) by mailing a copy of such process by registered 
        mail or certified mail addressed to such person, 
        partnership, or corporation at his, or her, or its 
        residence, principal office, or principal place or 
        business.
The verified return by the person serving such process setting 
forth the manner of such service shall be proof of the same.
    (d) Whenever it appears to the satisfaction of the court in 
the case of a newspaper, magazine, periodical, or other 
publication, published at regular intervals--
            (1) that restraining the dissemination of a false 
        advertisement in any particular issue of such 
        publication would delay the delivery of such issue 
        after the regular time therefor, and
            (2) that such delay would be due to the method by 
        which the manufacture and distribution of such 
        publication is customarily conducted by the publisher 
        in accordance with sound business practice, and not to 
        any method or device adopted for the evasion of this 
        section or to prevent or delay the issuance of an 
        injunction or restraining order with respect to such 
        false advertisement or any other advertisement,
the court shall exclude such issue from the operation of the 
restraining order or injunction.

           *       *       *       *       *       *       *

    Sec. 20. (a) For purposes of this section:
            (1) The terms ``civil investigative demand'' and 
        ``demand'' mean any demand issued by the Commission 
        under subsection (c)(1).
            (2) The term ``Commission investigation'' means any 
        inquiry conducted by a Commission investigator for the 
        purpose of ascertaining whether any person is or has 
        been engaged in any unfair or deceptive acts or 
        practices in or affecting commerce (within the meaning 
        of section 5(a)(1)) or in any antitrust violations.
            (3) The term ``Commission investigator'' means any 
        attorney or investigator employed by the Commission who 
        is charged with the duty of enforcing or carrying into 
        effect any provisions relating to unfair or deceptive 
        acts or practices in or affecting commerce (within the 
        meaning of section 5(a)(1)) or any provisions relating 
        to antitrust violations.
            (4) The term ``custodian'' means the custodian or 
        any deputy custodian designated under section 
        21(b)(2)(A).
            (5) The term ``documentary material'' includes the 
        original or any copy of any book, record, report, 
        memorandum, paper, communication, tabulation, chart, or 
        other document.
            (6) The term ``person'' means any natural person, 
        partnership, corporation, association, or other legal 
        entity, including any person acting under color or 
        authority of State law.
            (7) The term ``violation'' means any act or 
        omission constituting an unfair or deceptive act or 
        practice in or affecting commerce (within the meaning 
        of section 5(a)(1)) or any antitrust violation.
            (8) The term ``antitrust violation'' means--
                    (A) any unfair method of competition 
                (within the meaning of section 5(a)(1));
                    (B) any violation of the Clayton Act or of 
                any other Federal statute that prohibits, or 
                makes available to the Commission a civil 
                remedy with respect to, any restraint upon or 
                monopolization of interstate or foreign trade 
                or commerce;
                    (C) with respect to the International 
                Antitrust Enforcement Assistance Act of 1994, 
                any violation of any of the foreign antitrust 
                laws (as defined in section 12 of such Act) 
                with respect to which a request is made under 
                section 3 of such Act; or
                    (D) any activity in preparation for a 
                merger, acquisition, joint venture, or similar 
                transaction, which if consummated, may result 
                in any such unfair method of competition or in 
                any such violation.
    (b) For the purpose of investigations performed pursuant to 
this section with respect to unfair or deceptive acts or 
practices in or affecting commerce (within the meaning of 
section 5(a)(1)), all actions of the Commission taken under 
section 6 and section 9 shall be conducted pursuant to 
subsection (c).
    (c)(1) Whenever the Commission has reason to believe that 
any person may be in possession, custody, or control of any 
documentary material or tangible things, or may have any 
information, relevant to unfair or deceptive acts or practices 
in or affecting commerce (within the meaning of section 
5(a)(1)), or to antitrust violations, the Commission may, 
before the institution of any proceedings under this Act, or 
under section 7 of the Clayton Act (15 U.S.C. 18), where 
applicable, issue in writing, and cause to be served upon such 
person, a civil investigative demand requiring such person to 
produce such documentary material for inspection and copying or 
reproduction, to submit such tangible things, to file written 
reports or answers to questions, to give oral testimony 
concerning documentary material or other information, or to 
furnish any combination of such material, answers, or 
testimony.
    (2) Each civil investigative demand shall state the nature 
of the conduct constituting the alleged violation which is 
under investigation and the provision of law applicable to such 
violation.
    (3) Each civil investigative demand for the production of 
documentary material shall--
            (A) describe each class of documentary material to 
        be produced under the demand with such definiteness and 
        certainty as to permit such material to be fairly 
        identified;
            (B) prescribe a return date or dates which will 
        provide a reasonable period of time within which the 
        material so demanded may be assembled and made 
        available for inspection and copying or reproduction; 
        and
            (C) identify the custodian to whom such material 
        shall be made available.
    (4) Each civil investigative demand for the submission of 
tangible things shall--
            (A) describe each class of tangible things to be 
        submitted under the demand with such definiteness and 
        certainty as to permit such things to be fairly 
        identified;
            (B) prescribe a return date or dates which will 
        provide a reasonable period of time within which the 
        things so demanded may be assembled and submitted; and
            (C) identify the custodian to whom such things 
        shall be submitted.
    (5) Each civil investigative demand for written reports or 
answers to questions shall--
            (A) propound with definiteness and certainty the 
        reports to be produced or the questions to be answered;
            (B) prescribe a date or dates at which time written 
        reports or answers to questions shall be submitted; and
            (C) identify the custodian to whom such reports or 
        answers shall be submitted.
    (6) Each civil investigative demand for the giving of oral 
testimony shall--
            (A) prescribe a date, time, and place at which oral 
        testimony shall be commenced; and
            (B) identify a Commission investigator who shall 
        conduct the investigation and the custodian to whom the 
        transcript of such investigation shall be submitted.
    (7)(A) Any civil investigative demand may be served by any 
Commission investigator at any place within the territorial 
jurisdiction of any court of the United States.
    (B) Any such demand or any enforcement petition filed under 
this section may be served upon any person who is not found 
within the territorial jurisdiction of any court of the United 
States, in such manner as the Federal Rules of Civil Procedure 
prescribe for service in a foreign nation.
    (C) To the extent that the courts of the United States have 
authority to assert jurisdiction over such person consistent 
with due process, the United States District Court for the 
District of Columbia shall have the same jurisdiction to take 
any action respecting compliance with this section by such 
person that such district court would have if such person were 
personally within the jurisdiction of such district court.
    (8) Service of any civil investigative demand or any 
enforcement petition filed under this section may be made upon 
a partnership, corporation, association, or other legal entity 
by--
            (A) delivering a duly executed copy of such demand 
        or petition to any partner, executive officer, managing 
        agent, or general agent of such partnership, 
        corporation, association, or other legal entity, or to 
        any agent of such partnership, corporation, 
        association, or other legal entity authorized by 
        appointment or by law to receive service of process on 
        behalf of such partnership, corporation, association, 
        or other legal entity;
            (B) delivering a duly executed copy of such demand 
        or petition to the principal office or place of 
        business of the partnership, corporation, association, 
        or other legal entity to be served; or
            (C) depositing a duly executed copy in the United 
        States mails, by registered or certified mail, return 
        receipt requested, duly addressed to such partnership, 
        corporation, association, or other legal entity at its 
        principal office or place of business.
    (9) Service of any civil investigative demand or of any 
enforcement petition filed under this section may be made upon 
any natural person by--
            (A) delivering a duly executed copy of such demand 
        or petition to the person to be served; or
            (B) depositing a duly executed copy in the United 
        States mails by registered or certified mail, return 
        receipt requested, duly addressed to such person at his 
        residence or principal office or place of business.
    (10) A verified return by the individual serving any civil 
investigative demand or any enforcement petition filed under 
this section setting forth the manner of such service shall be 
proof of such service. In the case of service by registered or 
certified mail, such return shall be accompanied by the return 
post office receipt of delivery of such demand or enforcement 
petition.
    (11) The production of documentary material in response to 
a civil investigative demand shall be made under a sworn 
certificate, in such form as the demand designates, by the 
person, if a natural person, to whom the demand is directed or, 
if not a natural person, by any person having knowledge of the 
facts and circumstances relating to such production, to the 
effect that all of the documentary material required by the 
demand and in the possession, custody, or control of the person 
to whom the demand is directed has been produced and made 
available to the custodian.
    (12) The submission of tangible things in response to a 
civil investigative demand shall be made under a sworn 
certificate, in such form as the demand designates, by the 
person to whom the demand is directed or, if not a natural 
person, by any person having knowledge of the facts and 
circumstances relating to such production, to the effect that 
all of the tangible things required by the demand and in the 
possession, custody, or control of the person to whom the 
demand is directed have been submitted to the custodian.
    (13) Each reporting requirement or question in a civil 
investigative demand shall be answered separately and fully in 
writing under oath, unless it is objected to, in which event 
the reasons for the objection shall be stated in lieu of an 
answer, and it shall be submitted under a sworn certificate, in 
such form as the demand designates, by the person, if a natural 
person, to whom the demand is directed or, if not a natural 
person, by any person responsible for answering each reporting 
requirement or question, to the effect that all information 
required by the demand and in the possession, custody, control, 
or knowledge of the person to whom the demand is directed has 
been submitted.
    (14)(A) Any Commission investigator before whom oral 
testimony is to be taken shall put the witness on oath or 
affirmation and shall personally, or by any individual acting 
under his direction and in his presence, record the testimony 
of the witness. The testimony shall be taken stenographically 
and transcribed. After the testimony is fully transcribed, the 
Commission investigator before whom the testimony is taken 
shall promptly transmit a copy of the transcript of the 
testimony to the custodian.
    (B) Any Commission investigator before whom oral testimony 
is to be taken shall exclude from the place where the testimony 
is to be taken all other persons except the person giving the 
testimony, his attorney, the officer before whom the testimony 
is to be taken, and any stenographer taking such testimony.
    (C) The oral testimony of any person taken pursuant to a 
civil investigative demand shall be taken in the judicial 
district of the United States in which such person resides, is 
found, or transacts business, or in such other place as may be 
agreed upon by the Commission investigator before whom the oral 
testimony of such person is to be taken and such person.
    (D)(i) Any person compelled to appear under a civil 
investigative demand for oral testimony pursuant to this 
section may be accompanied, represented, and advised by an 
attorney. The attorney may advise such person, in confidence, 
either upon the request of such person or upon the initiative 
of the attorney, with respect to any question asked of such 
person.
    (ii) Such person or attorney may object on the record to 
any question, in whole or in part, and shall briefly state for 
the record the reason for the objection. An objection may 
properly be made, received, and entered upon the record when it 
is claimed that such person is entitled to refuse to answer the 
question on grounds of any constitutional or other legal right 
or privilege, including the privilege against self-
incrimination. Such person shall not otherwise object to or 
refuse to answer any question, and shall not himself or through 
his attorney otherwise interrupt the oral examination. If such 
person refuses to answer any question, the Commission may 
petition the district court of the United States pursuant to 
this section for an order compelling such person to answer such 
question.
    (iii) If such person refuses to answer any question on 
grounds of the privilege against self-incrimination, the 
testimony of such person may be compelled in accordance with 
the provisions of section 6004 of title 18, United States Code.
    (E)(i) After the testimony of any witness is fully 
transcribed, the Commission investigator shall afford the 
witness (who may be accompanied by an attorney) a reasonable 
opportunity to examine the transcript. The transcript shall be 
read to or by the witness, unless such examination and reading 
are waived by the witness. Any changes in form or substance 
which the witness desires to make shall be entered and 
identified upon the transcript by the Commission investigator 
with a statement of the reasons given by the witness for making 
such changes. The transcript shall then be signed by the 
witness, unless the witness in writing waives the signing, is 
ill, cannot be found, or refuses to sign.
    (ii) If the transcript is not signed by the witness during 
the 30-day period following the date upon which the witness is 
first afforded a reasonable opportunity to examine it, the 
Commission investigator shall sign the transcript and state on 
the record the fact of the waiver, illness, absence of the 
witness, or the refusal to sign, together with any reasons 
given for the failure to sign.
    (F) The Commission investigator shall certify on the 
transcript that the witness was duly sworn by him and that the 
transcript is a true record of the testimony given by the 
witness, and the Commission investigator shall promptly deliver 
the transcript or send it by registered or certified mail to 
the custodian.
    (G) The Commission investigator shall furnish a copy of the 
transcript (upon payment of reasonable charges for the 
transcript) to the witness only, except that the Commission may 
for good cause limit such witness to inspection of the official 
transcript of his testimony.
    (H) Any witness appearing for the taking of oral testimony 
pursuant to a civil investigative demand shall be entitled to 
the same fees and mileage which are paid to witnesses in the 
district courts of the United States.
    (d) Materials received as a result of a civil investigative 
demand shall be subject to the procedures established in 
section 21.
    (e) Whenever any person fails to comply with any civil 
investigative demand duly served upon him under this section, 
or whenever satisfactory copying or reproduction of material 
requested pursuant to the demand cannot be accomplished and 
such person refuses to surrender such material, the Commission, 
through such officers or attorneys as it may designate, may 
file, in the district court of the United States for any 
judicial district in which such person resides, is found, or 
transacts business, and serve upon such person, a petition for 
an order of such court for the enforcement of this section. All 
process of any court to which application may be made as 
provided in this subsection may be served in any judicial 
district.
    (f)(1) Not later than 20 days after the service of any 
civil investigative demand upon any person under subsection 
(c), or at any time before the return date specified in the 
demand, whichever period is shorter, or within such period 
exceeding 20 days after service or in excess of such return 
date as may be prescribed in writing, subsequent to service, by 
any Commission investigator named in the demand, such person 
may file with the Commission a petition for an order by the 
Commission modifying or setting aside the demand.
    (2) The time permitted for compliance with the demand in 
whole or in part, as deemed proper and ordered by the 
Commission, shall not run during the pendency of such petition 
at the Commission, except that such person shall comply with 
any portions of the demand not sought to be modified or set 
aside. Such petition shall specify each ground upon which the 
petitioner relies in seeking such relief, and may be based upon 
any failure of the demand to comply with the provisions of this 
section, or upon any constitutional or other legal right or 
privilege of such person.
    (g) At any time during which any custodian is in custody or 
control of any documentary material, tangible things, reports, 
answers to questions, or transcripts of oral testimony given by 
any person in compliance with any civil investigative demand, 
such person may file, in the district court of the United 
States for the judicial district within which the office of 
such custodian is situated, and serve upon such custodian, a 
petition for an order of such court requiring the performance 
by such custodian of any duty imposed upon him by this section 
or section 21.
    (h) Whenever any petition is filed in any district court of 
the United States under this section, such court shall have 
jurisdiction to hear and determine the matter so presented, and 
to enter such order or orders as may be required to carry into 
effect the provisions of this section. Any final order so 
entered shall be subject to appeal pursuant to section 1291 of 
title 28, United States Code. Any disobedience of any final 
order entered under this section by any court shall be punished 
as a contempt of such court.
    (i) Notwithstanding any other provision of law, the 
Commission shall have no authority to issue a subpoena or make 
a demand for information, under authority of this Act or any 
other provision of law, unless such subpoena or demand for 
information is signed by a Commissioner acting pursuant to a 
Commission resolution. The Commission shall not delegate the 
power conferred by this section to sign subpoenas or demands 
for information to any other person.
    (j) The provisions of this section shall not--
            (1) apply to any proceeding under section 5(b), any 
        proceeding under section 11(b) of the Clayton Act (15 
        U.S.C. 21(b)), or any adjudicative proceeding under any 
        other provision of law; or
            (2) apply to or affect the jurisdiction, duties, or 
        powers of any agency of the Federal Government, other 
        than the Commission.

           *       *       *       *       *       *       *

                            Dissenting Views

    H.R. 2745, the ``Standard Merger and Acquisition Reviews 
Through Equal Rules Act of 2015'' or ``SMARTER Act,'' would 
undermine the independence of the Federal Trade Commission 
(FTC) and contravene the agency's unique role in developing 
antitrust policy. H.R. 2745 does this by eliminating the FTC's 
ability to use the procedures established under the Federal 
Trade Commission Act (FTC Act)\1\ to enforce antitrust law in 
merger cases, including 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 
by undermining the FTC's ability to address non-merger 
activity. Finally, in seeking to harmonize the process for 
proposed mergers or acquisitions, H.R. 2745 addresses a non-
existent problem while applying a less consumer-friendly 
standard.
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    \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 (2016).
---------------------------------------------------------------------------
    H.R. 2745 is not a modest measure. It represents a major 
change to the status quo by changing 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 testified earlier this Congress that the identical 
Senate companion bill ``would fundamentally alter a critical 
aspect of the agency's institutional role and risks impeding 
its ability to protect American consumers and the public 
interest.''\2\ In addition, the American Antitrust Institute, a 
consumer-oriented antitrust organization, strongly opposes the 
legislation, particularly with respect to its elimination of 
the FTC's ability to use administrative adjudication in merger 
cases.\3\ Consumers Union, the policy and advocacy arm of 
Consumer Reports, has echoed these concerns, observing that 
that ``we do not believe the case has been made . . . that 
there is a material problem here that warrants making 
alterations to the FTC's fundamental enforcement 
structure.''\4\
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    \2\The Standard Merger and Acquisition Reviews Through Equal Rules 
Act of 2015: Hearing on S. 2102 Before the Subcomm. on Antitrust, 
Competition Policy and Consumer Rights of the S. Comm on the Judiciary, 
114th Cong. 47 (2015) (statement of Edith Ramirez, Chairwoman, Federal 
Trade Commission), https://www.judiciary.senate.gov/imo/media/doc/10-
07-15%20
Ramirez%20Testimony.pdf [hereinafter Senate Hearing]. Chairwoman 
Ramirez expressed similar concerns with an earlier, but substantially 
similar, draft of the SMARTER Act, that she said would have ``far-
reaching immediate effects'' and the ``potential for significant 
unintended consequences.'' 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 ``Foer Letter'']; The Standard Merger and 
Acquisition Reviews Through Equal Rules Act of 2015: Hearing on H.R. 
2745 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust 
Law of the H. Comm. on the Judiciary, 114th Cong. 47 (2015), http://
judiciary.house.gov/_cache/files/9f77f8c3-6b40-4b22-b337-51ddbedab9b6/
114-32-95119.pdf (statement of Bert Foer, senior fellow, American 
Antitrust Institute).
    \4\Letter from George P. Slover, Senior Policy Counsel, Consumers 
Union, to Representatives Bob Goodlatte (R-VA), Chairman, H. Comm. on 
the Judiciary, et al. (June 25, 2015) (on file with Democratic staff of 
the H. Comm. on the Judiciary).
---------------------------------------------------------------------------
    For these reasons, and those described below, we urge our 
colleagues to oppose H.R. 2745.

                       DESCRIPTION AND BACKGROUND

                              DESCRIPTION

    H.R. 2745 eliminates the ability of the 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 (Clayton Act) in such 
circumstances.\5\ The following is a description of the bill's 
substantive provisions.
---------------------------------------------------------------------------
    \5\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 (2016).
---------------------------------------------------------------------------
    Section 2 of H.R. 2745 amends the Clayton Act in order to 
bring the FTC's merger enforcement authority under the Act. 
Under current law, the DOJ's Antitrust Division and the FTC's 
Bureau of Competition enforce the Nation's antitrust laws 
jointly. Nevertheless, while the DOJ enforces the antitrust 
laws through civil actions under the Clayton Act and Sherman 
Act, the FTC enforces the antitrust laws through section 5 of 
the FTC Act, which prohibits unfair methods of competition. As 
amended, H.R. 2745 would align the merger-enforcement 
requirements of the DOJ and FTC under the Clayton Act.
    Section 2(1) amends section 4F of the Clayton Act, which 
currently requires the U.S. Attorney General to notify any 
state attorney general when initiating an action under the 
antitrust laws if the U.S. Attorney General 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. As amended, new section 4F would make 
these requirements applicable to the FTC's enforcement actions 
under section 7 of the Clayton Act.
    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; requires 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. As amended, new section 5 would make these 
requirements applicable to the FTC's enforcement actions under 
section 7 of the Clayton Act.
    Section 2(3) of H.R. 2745 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 add at the end a new provision specifying that when 
engaged in merger enforcement, the FTC must follow the same 
procedures that the DOJ would follow, except with respect to 
the enforcement of a consent order.
    Section 2(4) of the bill amends section 13 of the Clayton 
Act, which provides that in any government suit, a subpoena for 
a witness who is 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 make this provision also applicable to 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 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) would, in addition, assign 
the FTC the same duties as 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 Act's provisions. 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.
    Section 3(1) of the bill 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.'' 
Notably, section 3(1) excludes mergers from the FTC's 
administrative process as well as pre-merger activity, 
acquisitions, joint ventures, or other similar transactions 
from the definition of ``method of competition'' as used in the 
portion of section 5(b) of the FTC Act giving the FTC the 
authority to issue reports and cease-and-desist orders. The 
inclusion of pre-merger activity 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.
    Section 3(4) amends section 20(c)(1) of the FTC Act, which 
grants the FTC the authority to issue civil investigative 
demands requiring the production of documents or other 
discovery. Section 3(4) of the bill specifies that the FTC 
retains this authority in any enforcement proceeding under the 
Clayton Act.

                               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.\6\ Thereafter, the position of Assistant 
Attorney General for Antitrust in the DOJ was created in 
1903.\7\ Neither effort, however, was sufficiently effective to 
stem these abuses. President Woodrow Wilson subsequently signed 
the FTC Act in 1914,\8\ establishing the FTC and making 
unlawful, inter alia, ``unfair methods of competition.''\9\ 
That same year, President Wilson also signed into law the 
Clayton Antitrust Act.\10\ 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\11\ and have the exclusive 
authority to enforce the FTC Act.\12\ Additionally, Congress 
gave the FTC broad investigative and reporting powers and 
authorized its Commissioners 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.\13\
---------------------------------------------------------------------------
    \6\15 U.S.C. Sec. Sec. 1-7 (2016).
    \7\The Antitrust Division became a separate operating unit within 
DOJ in 1933. Antitrust Modernization Commission, Report and 
Recommendations, at 129 (Apr. 2007), http://govinfo.library.unt.edu/
amc/report_recommendation/amc_final_report.pdf [hereinafter ``AMC 
Report''].
    \8\15 U.S.C. Sec. Sec. 41-58 (2016).
    \9\15 U.S.C. Sec. 45(a) (2016); 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].
    \10\FTC History, supra note 9, at 6; 15 U.S.C. Sec. Sec. 12-27, 29 
U.S.C. Sec. Sec. 52-53 (2016).
    \11\An ``independent'' agency is one that has some measure of 
independence from the President. The principal evidence 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).
    \12\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.'').
    \13\15 U.S.C. Sec. 45(b) (2016).
---------------------------------------------------------------------------
    According to one 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 between its enactment and the passage of the 
FTC Act in 1914.\14\ Advocates for the creation of the FTC 
disclaimed any intent to amend the Sherman Act or to undermine 
DOJ's enforcement role.\15\ Rather, they sought to enhance 
existing antitrust law and enforcement, and in particular, to 
establish ``a new agency that would prosecute if the [DOJ] 
faltered, enforcing a flexible new standard where the Sherman 
Act might not.''\16\
---------------------------------------------------------------------------
    \14\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.
    \15\Id.
    \16\Id.
---------------------------------------------------------------------------
    Congress has historically granted the FTC broad authority 
to prohibit unfair methods of competition. Indeed, every time 
the Supreme Court has restricted the FTC's statutory authority 
through a ruling, Congress has responded by amending the FTC 
Act to expand the FTC's authority.\17\ Notwithstanding this 
support, a congressional backlash against the FTC's authority 
materialized in 1980 through what one commentator describes as 
``a tidal wave of response and restricting legislation.''\18\ 
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.''\19\
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    \17\FTC History, supra note 9, 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).
    \18\Id. at 9.
    \19\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.
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            2. LFTC and the Broader Antitrust Merger Enforcement Regime
    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.\20\ 
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 ``Merger Guidelines'' that 
outline the type of inquiry to be followed in reviewing a 
proposed merger.\21\ According to the Guidelines, ``mergers 
should not be permitted to create, enhance, or entrench market 
power or to facilitate its exercise.''\22\
---------------------------------------------------------------------------
    \20\15 U.S.C. Sec. 21(a) (2016).
    \21\U.S. Dep't of Justice and Federal Trade Comm'n, Horizontal 
Merger Guidelines (2010).
    \22\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 (HSR Act),\23\ 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 a particular transaction.
---------------------------------------------------------------------------
    \23\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 (2016) 
(establishing a pre-merger review process for transactions that meet 
certain dollar thresholds).
---------------------------------------------------------------------------
    If the reviewing agency ultimately determines that the 
transaction is illegal, the DOJ will file a complaint in 
Federal court, while the FTC will institute an administrative 
proceeding to stop the parties from consummating the 
transaction. Oftentimes, such suits are resolved with the entry 
of a consent decree in which 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 pre-merger review process 
under the HSR Act has dramatically reduced the amount of 
antitrust litigation since its enactment.
            3. LPreliminary 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.\24\
---------------------------------------------------------------------------
    \24\See, e.g., AMC Report, supra note 7, at 142 (``[A]gencies face 
nominally different standards governing whether a Federal district 
court will issue a preliminary injunction,'' but ``the magnitude of the 
difference between the two standards is not clear.'').
---------------------------------------------------------------------------
B. LAntitrust Modernization Commission
    Congress created the Antitrust Modernization Commission 
(AMC) in 2002 to examine whether antitrust laws, policies, and 
procedures should 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.\25\ In 2007, the AMC issued a 449-page 
report outlining 80 recommendations for revisions to antitrust 
law and policy.\26\ Only two of these 80 recommendations--
advocating 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. To date, Congress has not considered the 
remainder of the AMC's recommendations.
---------------------------------------------------------------------------
    \25\Antitrust Modernization Commission Act of 2002, Pub. L. No. 
107-273, Sec. 11054(h), 116 Stat. 1856, 1857 (2002).
    \26\AMC Report, supra note 7, at 1.
---------------------------------------------------------------------------

                        CONCERNS WITH H.R. 2745

  I. H.R. 2745 WOULD ELIMINATE THE FTC'S ADMINISTRATIVE ADJUDICATION 
   AUTHORITY IN MERGER CASES, UNDERMINING THE FTC'S INDEPENDENCE AND 
         CONTRAVENING CONGRESS' PURPOSE IN CREATING THE AGENCY.

    H.R. 2745 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 serve to alter the FTC's 
character as an independent administrative agency and turn it 
into another executive enforcement agency in HSR merger cases. 
This fundamental change would undermine 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. Congress' intent in 
establishing the FTC as an independent agency was not only to 
supplement the DOJ's enforcement activity where it may be 
lacking, but to also develop antitrust policy with a body of 
antitrust experts not subject to swings in political ideology 
that the DOJ, as an arm of the Executive Branch, may 
experience.\27\ As FTC Chairwoman Ramirez noted, ``Congress 
created the Commission in 1914 as an independent, bipartisan 
agency to augment then-existing antitrust enforcement 
efforts.''\28\ In doing so, Congress recognized that ``American 
consumers would benefit from an expert agency with the means to 
develop competition law and policy over time,'' Chairwoman 
Ramirez added.\29\ Committee reports from both houses of 
Congress during the establishment of the FTC bolster this 
view.\30\ By weakening the FTC's independence, H.R. 2745 
undermines these benefits for American consumers.
---------------------------------------------------------------------------
    \27\Id. at 129 (noting that Congress ``also believed that an 
administrative agency--conducting administrative adjudication of 
antitrust cases, and vested with broad information-gather powers--would 
be a better vehicle for developing more flexible standards of antitrust 
law than were the courts.'').
    \28\Senate Hearing, supra note 2, at 2 (statement of Edith Ramirez, 
Chairwoman, Federal Trade Commission).
    \29\Id.
    \30\Humphrey's Ex'r v. United States, 295 U.S. 602, 624 (1935) 
(quoting S. Rep. No. 63-597, at 10-11 (1914)).
---------------------------------------------------------------------------
    Beyond the specific changes proposed by H.R. 2745, 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 from the DOJ, should 
be viewed with skepticism.\31\ Although H.R. 2745 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 as an antitrust enforcement and 
policymaking agency.
---------------------------------------------------------------------------
    \31\See, e.g., 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/0909
antrust_0.pdf.
---------------------------------------------------------------------------
    We are therefore particularly troubled by H.R. 2745's 
elimination of the FTC's authority to use administrative 
adjudication in merger enforcement matters. As Chairwoman 
Ramirez noted:

        The FTC plays an essential role in protecting consumers 
        from anticompetitive mergers. By seeking to alter the 
        Commission's adjudicative function, the proposed 
        legislation risks eroding a fundamental institutional 
        attribute of the FTC. This quasi-judicial role is a 
        defining characteristic of the agency--authority 
        Congress very deliberately granted to the FTC when the 
        agency was created to serve as a complement to 
        enforcement by DOJ. The current system has worked well 
        for over one hundred years, and all indications are 
        that it will continue to do so to the benefit of 
        competition and consumers.\32\
---------------------------------------------------------------------------
    \32\Senate Hearing, supra note 2, at 14 (statement of Edith 
Ramirez, Chairwoman, Federal Trade Commission).

    In discussing the value of administrative adjudication, 
Bert Foer, President of the American Antitrust Institute, 
---------------------------------------------------------------------------
stated in his 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 2 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.\33\
---------------------------------------------------------------------------
    \33\Foer Letter, supra note 3, 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. 2745, 
Professor John Kirkwood of the Seattle University School of 
Law, expressed great concern about the removal of the FTC's 
administrative adjudication authority.\34\ 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 may be able to do.\35\ Professor Kirkwood's concern was 
twofold. First, removing the FTC's administrative adjudication 
authority in merger cases might lead to a ``slippery slope'' 
whereby such authority would eventually be removed in other 
areas of antitrust enforcement.\36\ Second, administrative 
adjudication supports the FTC's congressionally-mandated 
mission of developing administrative expertise through 
sustained attention, information-gathering, and vigorous 
enforcement.\37\ 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, 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.\38\ 
Jonathan Jacobson, a former AMC commissioner, echoed many of 
these concerns. He observed:
---------------------------------------------------------------------------
    \34\Hearing on the Standard Merger and Acquisition Reviews Through 
Equal Rules Act of 2014 Before the S. Comm. On Regulatory Reform, 
Commercial and Antitrust Law, 113th Cong. 13 (2014) (statement of John 
B. Kirkwood, Professor of Law and Associate Dean for Strategic Planning 
and Mission, Seattle University School of Law), http://
judiciary.house.gov/_cache/files/4b07b175-6ca6-400e-b218-2e42b3ffa0d0/
113-83-87424.pdf [hereinafter Kirkwood Statement].
    \35\Id.
    \36\Id. at 5.
    \37\Id.
    \38\Id.

        Part III administrative litigation--both for 
        anticompetitive conduct matters and mergers--is core to 
        the FTC's basic mission. Prior to 1976 (when Hart-
        Scott-Rodino was passed), administrative litigation of 
        FTC merger matters was the only type of FTC merger 
        review, and retaining discretion to pursue 
        administrative litigation where appropriate is 
        consistent with the FTC's assignment to develop and 
        apply expertise on competition law issues in an 
        administrative context. If the FTC finds it appropriate 
        to develop the law through follow-on administrative 
        proceedings where it could, for example, perform a more 
        rigorous analysis of new economic theories and evidence 
        than a generalist district court might be able to 
        perform, it should have discretion to do so. That is 
        precisely what Congress intended when creating the FTC 
        101 years ago.\39\
---------------------------------------------------------------------------
    \39\Senate Hearing, supra note 2, at 7 (statement of Jonathan 
Jacobson, former commissioner of the Antitrust Modernization 
Commission), https://www.judiciary.senate.gov/imo/media/doc/10-07-
15%20Jacobson%20Testimony.pdf.

    Ranking Member John Conyers, Jr., in agreeing with the 
views of Chairwoman Ramirez, Mr. Jacobson, Mr. Foer, and 
Professor Kirkwood, stated that H.R. 2745 does not strengthen 
the Commission's authority, and ``unfortunately does just the 
opposite.''\40\ Rep. Henry C. ``Hank'' Johnson, Jr., Ranking 
Member of the Subcommittee on Regulatory Reform, Commercial, 
and Antitrust Law, echoed this concern while noting that 
``[l]eading authorities in antitrust across party lines have 
expressed serious reservations with eliminating the 
Commission's administrative litigation authority.''\41\ 
Notwithstanding these concerns, the bill was reported out of 
Committee unamended by a vote of 18 to 10.\42\
---------------------------------------------------------------------------
    \40\Unofficial Tr. of the Markup of: H.R. 2745, the ``Standard 
Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act of 
2015'' by the H. Comm. on the Judiciary, 114th Cong. (2015), at 24, 
http://judiciary.house.gov/_cache/files/832fcdef-e01f-4cef-a40f-
b5c3c869a4bf/09.30.15-markup-transcript.pdf.
    \41\Id. at 33.
    \42\Id. at 56.
---------------------------------------------------------------------------

     II. H.R. 2745'S SCOPE IS BROADER THAN THE AMC RECOMMENDATIONS

    H.R. 2745 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 the same standard that DOJ is subject to when seeking a 
preliminary injunction in an HSR case.\43\ 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, a recommendation that the AMC 
specifically rejected.\44\ Second, the bill's carve-out for the 
FTC's administrative adjudication authority would reach beyond 
merger cases to also include ``joint ventures'' and ``similar 
transactions'' as well as pre-merger activity, meaning that the 
loss of the FTC administrative adjudication authority would 
extend beyond the scope of section 7 of the Clayton Act to 
potentially include non-merger activity.
---------------------------------------------------------------------------
    \43\AMC Report, supra note 7, at 140-41.
    \44\Id. at 129 (recommending ``no comprehensive change to the 
existing system in which both the FTC and the DOJ enforce the antitrust 
laws'').
---------------------------------------------------------------------------
    Additionally, the FTC's loss of administrative litigation 
authority could reach consummated mergers as well as non-
consummated ones. Mr. Jacobson noted in his testimony in 
opposition to the SMARTER Act that ``to the extent that the 
legislation is intended to implement the AMC's recommendation, 
it is drafted too broadly.'' He explained:

        The AMC recommended that Congress implement legislation 
        ``to prohibit the Federal Trade Commission from 
        pursuing administrative litigation in Hart-Scott-Rodino 
        Act merger cases.'' Its proposal ``would not preclude 
        the FTC from pursuing an administrative complaint after 
        the consummation of a merger, based on evidence that 
        the merger has had actual, as opposed to predicted, 
        anticompetitive effects.'' But the proposed legislation 
        could be construed as prohibiting a challenge to the 
        ``consummation'' of any merger in administrative 
        proceedings, even a post-merger challenge, 
        notwithstanding the term ``proposed.'' If enacted at 
        all, I strongly recommend clarifying that the exclusion 
        would only apply to ``the consummation of a proposed 
        merger, acquisition, joint venture, or similar 
        transaction that is subject to section 7 of the Clayton 
        Act (15 U.S.C. 18) where the merger, acquisition, joint 
        venture, or similar transaction has not yet been 
        consummated'' for avoidance of doubt. There is no 
        justification for eliminating administrative litigation 
        in post-consummation challenges, for those are not 
        undertaken with the time sensitivity attendant on a 
        challenge to a merger occurring prior to the closing of 
        the transaction.\45\
---------------------------------------------------------------------------
    \45\Senate Hearing, supra note 2, at 3-4 (statement of Jonathan 
Jacobson, former commissioner of the Antitrust Modernization 
Commission), (emphasis in original) (footnotes omitted) https://
www.judiciary.senate.gov/imo/media/doc/10-07-
15%20Jacobson%20Testimony.pdf.

Mr. Jacobson further noted that the FTC's success in post-
consummation merger challenges is held in high regard by the 
antitrust bar and has been upheld on appeal.\46\
---------------------------------------------------------------------------
    \46\Id.
---------------------------------------------------------------------------

 III. H.R. 2745 ADDRESSES A NON-EXISTENT PROBLEM WHILE APPLYING A LESS 
                       CONSUMER-FRIENDLY STANDARD

    To the extent that H.R. 2745 seeks to harmonize the 
preliminary injunction standard applicable in both DOJ merger 
cases\47\ and FTC merger cases,\48\ doing so does not appear to 
solve a real problem. The dominant opinion among courts, 
academics, and the antitrust bar is that the standards, while 
nominally different, are the same in practice.\49\ Both FTC 
Chairwoman Ramirez and Assistant Attorney General William Baer 
have underscored this point, arguing that regardless of which 
agency seeks a preliminary injunction in merger cases, both are 
required ``to make a robust evidentiary and legal showing that 
the transaction would likely be anticompetitive.''\50\ Far from 
providing differential treatment, Federal district courts 
``closely scrutinize cases brought by both agencies,''\51\ with 
one court recently observing that the FTC's preliminary 
injunction standard ``demands rigorous proof to block a 
proposed merger or acquisition.''\52\
---------------------------------------------------------------------------
    \47\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 (2016). 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. U.S. 
v. Siemens Corp., 621 F.2d 499, 505 (2d Cir. 1980).
    \48\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) (2016). 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).
    \49\See, e.g., AMC Report, supra note 7, 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).
    \50\Senate Hearing, supra note 2, at 13 (statement of Edith 
Ramirez, Chairwoman, Federal Trade Commission),
    https://www.judiciary.senate.gov/imo/media/doc/10-07-
15%20Ramirez%20Testimony.pdf.
    \51\Id.
    \52\Fed. Trade Comm'n v. Sysco Corp., 113 F. Supp. 3d 1, 23 (D.D.C. 
2015).
---------------------------------------------------------------------------
    Assuming there is a substantive difference between the 
injunction standards, however, attempting to unify them 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. Instead, Congress should default to a standard 
that is deferential to agency expertise, as Mr. Foer of AAI 
suggests:

        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.\53\
---------------------------------------------------------------------------
    \53\The Standard Merger and Acquisition Reviews Through Equal Rules 
Act of 2015: Hearing on H.R. 2745 Before the Subcomm. on Regulatory 
Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary, 
114th Cong. 47 (2015), http://judiciary.house.gov/_cache/files/
9f77f8c3-6b40-4b22-b337-51ddbedab9b6/114-32-95119.pdf.

    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.\54\ 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.\55\
---------------------------------------------------------------------------
    \54\Kirkwood Statement, supra note 34, at 3.
    \55\Id at 4-5.
---------------------------------------------------------------------------
    In addition, H.R. 2745 does not appear to address any 
pressing or widespread problem. The changes that H.R. 2745 
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 rarer.
    In response to the claim that H.R. 2745 would reduce costs 
and uncertainty by promoting uniformity in merger reviews, it 
should be noted that FTC and DOJ already analyze mergers in 
exactly the same way, following the same substantive policy in 
conducting pre-merger reviews (i.e., the joint Merger 
Guidelines). Jonathan Jacobson, a former AMC Commissioner, 
underscored this similarity, arguing that in his experience the 
outcome of a merger has never turned on the perceived 
differences in merger enforcement addressed by H.R. 2745:

        In my 39 years of practice, the firms in which I have 
        been a partner have sheparded many dozens of mergers 
        through the agencies. In each one, the planning process 
        has included a prediction as to which agency would be 
        cleared to evaluate the transaction. In none has there 
        been any consideration of abandoning or revising the 
        transaction because of the possibility that, after 
        prevailing in an FTC-brought preliminary injunction 
        proceeding, the Commission might later unwind the 
        merger through an administrative proceeding. The 
        potential for such an outcome occasionally appears as a 
        single sub-bullet point in a long PowerPoint, but never 
        affects planning or evaluation of the transaction's 
        prospects.\56\
---------------------------------------------------------------------------
    \56\Senate Hearing, supra note 2, at 1 (response to questions for 
the record from Jonathan Jacobson, former commissioner, Antitrust 
Modernization Commission) (emphasis in original), https://
www.judiciary.senate.gov/imo/media/doc/
Jacobson%20Responses%20to%20Klobuchar.pdf.

    Additionally, the FTC's internal procedures already make it 
highly unusual that the agency would ever seek such a ``second 
bite at the apple.''\57\ In 2015, the FTC set forth new 
procedures for the administrative adjudication process 
following a Federal court's denial of a preliminary injunction 
under section 13(b) of the FTC Act.\58\ Under the revised rule, 
parties have two options to end administrative adjudication 
following a preliminary injunction.\59\ First, a party may move 
to have an administrative adjudication withdrawn, which will 
automatically occur within 2 days of the filing unless there is 
an objection by the complaint counsel.\60\ Previously, 
administrative cases were only withdrawn from adjudication 
pursuant to the Commission's direction.\61\ Second, a party may 
file a motion to dismiss the administrative complaint on the 
basis that the public interest does not warrant further 
litigation,'' which results in an automatic stay of the 
proceeding for 7 days until Commission rules on the motion.\62\ 
Formerly, absent the Commission's direction, filing a motion to 
dismiss did not result in an automatic stay of the 
proceeding.\63\ Deborah Feinstein, the Director of the FTC's 
Bureau of Competition noted that this change creates ``a new 
and improved process that aims to be quicker, more predictable, 
and more transparent.''\64\
---------------------------------------------------------------------------
    \57\H.R. 2745'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 
matter 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, supra note 7, at 141; Foer Letter, supra note 3.
    \58\15 U.S.C. Sec. 53(b) (2016); Fed. Trade Commission, Commission 
Approves Revisions to Its Rules of Practice (Mar. 13, 2015), https://
www.ftc.gov/news-events/press-releases/2015/03/
commission-approves-revisions-its-rules-practice.
    \59\A party may also utilize this process following the denial of 
the Commission's motion for relief pending appeal by a Federal court of 
appeals. 16 C.F.R. Sec. 3.26(b)(2) (2016).
    \60\16 C.F.R. Sec. 3.26(c) (2016) (``The Secretary shall issue an 
order withdrawing the matter from adjudication 2 days after such a 
motion is filed, except that, if complaint counsel file an objection 
asserting that the conditions of paragraph (b) of this section have not 
been met, the Commission shall decide the motion within 10 days after 
the objection is filed.'').
    \61\16 C.F.R. Sec. 3.26(c) (2016) (``The matter will not be 
withdrawn from adjudication unless the Commission so directs.'').
    \62\16 C.F.R. Sec. 3.26(d)(2), (4) (2016).
    \63\16 C.F.R. Sec. 3.26(d) (2016) (``The filing of a motion to 
dismiss shall not stay the proceeding unless the Commission so 
directs.'').
    \64\Deborah Feinstein, Changes to Commission Rule 3.26 Re: Part 3 
Proceedings following Federal Court Denial of a Preliminary Injunction, 
Fed. Trade Commission (Mar. 16, 2015), https://www.ftc.gov/news-events/
blogs/competition-matters/2015/03/changes-commission-rule-326-re-part-
3-proceedings.
---------------------------------------------------------------------------
    The FTC's revision to Rule 3.26 does not, however, displace 
the Commission's longstanding policies of determining whether 
to forego administrative adjudication solely because a Federal 
court does not grant a preliminary injunction.\65\ In 1995, the 
FTC clarified that this determination is made on a case-by-case 
basis, guided by five factors to determine whether continuing 
administrative adjudication is in the public interest. These 
factors include:
---------------------------------------------------------------------------
    \65\Administrative Litigation Following the Denial of a Preliminary 
Injunction: Policy Statement, 60 Fed. Reg. 39742 (Aug. 3, 1995), 
https://www.ftc.gov/sites/default/files/attachments/merger-review/
950803administrativelitigation.pdf.

        (1) Lthe factual findings and legal conclusions of the 
---------------------------------------------------------------------------
        district court or any appellate court;

        (2) Lany new evidence developed during the preliminary 
        injunction proceeding;

        (3) Lwhether the transaction raises important issues of 
        fact, law, or merger policy that need resolution in 
        administrative litigation;

        (4) Lan overall assessment of the costs and benefits of 
        further proceedings; and

        (5) Lany other matter that bears on whether it would be 
        in the public interest to proceed with the merger 
        challenge.\66\
---------------------------------------------------------------------------
    \66\Id.

While there may be rare instances where there may be a ``second 
bite'' scenario, Mr. Jacobson notes that the FTC has refrained 
from using this authority since 1995, but that its use has 
historically served the public interest.\67\
---------------------------------------------------------------------------
    \67\Senate Hearing, supra note 2, at 2 (response to questions for 
the record from Jonathan Jacobson, former commissioner of the Antitrust 
Modernization Commission) (``[T]here has not been a single merger since 
then challenged in Part 3 after a preliminary injunction has been 
denied.''), https://www.judiciary.senate.gov/imo/media/doc/
Jacobson%20Responses%20to%20
Klobuchar.pdf.
---------------------------------------------------------------------------

                               CONCLUSION

    For over a century, the FTC has strengthened the 
enforcement of antitrust laws to protect American consumers. 
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 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. 
2745 ultimately strikes at the very heart of the rationale for 
the FTC's existence and directly contravenes Congress' intent 
in establishing the FTC over a century ago. Whatever the 
benefits for business in terms of lowered costs and 
uncertainty, undermining the FTC's independence and 
distinctiveness is simply too high a price to pay.
    We are additionally concerned that H.R. 2745 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 pre-merger activity, as well as consummated transaction.
    Finally, the bill's uniform preliminary injunction standard 
for merger cases appears to be a solution in search of a 
problem. 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 the bill's 
proponents contend, H.R. 2745 chooses the less consumer-
protective standard.
    For the foregoing reasons, we urge our colleagues to oppose 
H.R. 2745.

                                   Mr. Conyers, Jr.
                                   Mr. Nadler.
                                   Ms. Jackson Lee.
                                   Mr. Cohen.
                                   Mr. Johnson, Jr.
                                   Mr. Gutierrez.
                                   Mr. Richmond.
                                   Mr. Jeffries.
                                   Mr. Cicilline.

                                  [all]
```