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95–119 PDF 2015

STANDARD MERGER AND ACQUISITION REVIEWS 

THROUGH EQUAL RULES ACT OF 2015 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON

H.R. 2745 

JUNE 16, 2015 

Serial No. 114–32 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW

TOM MARINO, Pennsylvania, Chairman 

BLAKE FARENTHOLD, Texas, Vice-Chairman 

DARRELL E. ISSA, California 

DOUG COLLINS, Georgia 

MIMI WALTERS, California 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

DANIEL FLORES, Chief Counsel 
(III) 

C O N T E N T S 

JUNE 16, 2015 

Page 

THE BILL 

H.R. 2745, the ‘‘Standard Merger and Acquisition Reviews Through Equal 

Rules Act of 2015’’ ................................................................................................ 3 

OPENING STATEMENTS 

The Honorable Tom Marino, a Representative in Congress from the State 

of Pennsylvania, and Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law .................................................................................. 1 

The Honorable Henry C. ‘‘Hank’’ Johnson, Jr., a Representative in Congress 

from the State of Georgia, and Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law ................................................. 9 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 10 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 11 

WITNESSES 

Deborah A. Garza Esq., Partner, Covington & Burling LLP 

Oral Testimony ..................................................................................................... 14 

Prepared Statement ............................................................................................. 16 

David A. Clanton, Esq., Senior Counsel, Baker & McKenzie LLP 

Oral Testimony ..................................................................................................... 26 

Prepared Statement ............................................................................................. 28 

Abbott B. Lipsky, Jr., Esq., Partner, Latham & Watkins LLP 

Oral Testimony ..................................................................................................... 35 

Prepared Statement ............................................................................................. 37 

Albert A. Foer, Esq., Senior Fellow, American Antitrust Institute 

Oral Testimony ..................................................................................................... 47 

Prepared Statement ............................................................................................. 49 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Questions for the Record from David A. Clanton, Esq., Senior 

Counsel, Baker & McKenzie LLP ....................................................................... 66 

Response to Questions for the Record from Albert A. Foer, Esq., Senior 

Fellow, American Antitrust Institute ................................................................. 68 

Letter from Rick Pollack, Executive Vice President, the American Hospital 

Association ............................................................................................................ 73 

Letter of Support for H.R. 2745, the ‘‘Standard Merger and Acquisition Reviews Through Equal Rules Act of 2015’’ ........................................................... 74 

Letter from George P. Slover, Senior Policy Counsel, Consumers Union ........... 77 

(1) 

STANDARD MERGER AND ACQUISITION REVIEWS THROUGH EQUAL RULES ACT OF 

2015 

TUESDAY, JUNE 16, 2015 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON REGULATORY REFORM, 

COMMERCIAL AND ANTITRUST LAW

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 2:09 p.m., in room 

2141, Rayburn House Office Building, the Honorable Tom Marino 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Marino, Goodlatte, Farenthold, Collins, 

Bishop, Johnson, Conyers, DelBene, and Peters. 

Also Present: (Majority) Anthony Grossi, Counsel; Andrea Lindsey, Clerk; and (Minority) Slade Bond, Counsel. 

Mr. MARINO. The Subcommittee on Regulatory Reform, Commercial and Antitrust Law will come to order. Without objection, the 

Chair is authorized to declare recesses of the Committee at any 

time. 

We welcome everyone to today’s hearing on H.R. 2745, the 

‘‘Standard Merger and Acquisition Reviews Through Equal Rules 

Act of 2015.’’ I will recognize myself for an opening statement. 

Today’s hearing is on the ‘‘Standard Merger and Acquisition Reviews Through Equal Rules Act of 2015,’’ known as the ‘‘SMARTER 

Act.’’ This legislation enacts an Antitrust Modernization Commission recommendation that the standards and processes applied in 

the merger review process should be identical between our two 

antitrust enforcement agencies. 

Since 1914, two Federal agencies have enforced our Nation’s 

antitrust laws, the Department of Justice and the Federal Trade 

Commission. When a company wishes to merge with or purchase 

another company, it notifies both antitrust enforcement agencies of 

the proposed transaction. Ultimately, only one agency reviews the 

transaction to determine whether it violates the antitrust laws, and 

there is no fixed rule to determine which agency will conduct this 

review. 

When the reviewing antitrust enforcement agency concludes that 

the proposed transaction violates the antitrust laws, it then seeks 

to prevent the parties from consummating the deal. It is at this 
2 

stage of the merger review process that the AMC identified a problem. 

The AMC noted that there are different standards applied and 

processes available to the FTC and DOJ when each agency seeks 

to block a proposed transaction. Each agency is subject to a different preliminary injunction standard. 

Additionally, the FTC has the option to unwind or prevent the 

closing of the transaction through administrative litigation, DOJ on 

the other hand cannot. 

The AMC concluded that, although certain of the differences between the FTC and DOJ may have some benefits, the disparities 

between the dual merger review processes result in unfairness and 

uncertainty. In light of this finding, the AMC recommended that 

Congress harmonize the merger review processes and standards between the two antitrust enforcement agencies. 

The SMARTER Act effectuates this recommendation. This legislation was carefully drafted to reform only the merger review process. The SMARTER Act does not prevent the FTC from pursuing 

administrative litigation in conduct cases, against consummated 

transactions, or in any other context outside of the merger review. 

This narrow construction is consistent with the AMC’s recommendations. 

Our witnesses today come with experience in the FTC, the DOJ, 

the AMC, and in private practice. I look forward to hearing their 

testimony on the important reforms contained in the SMARTER 

Act. 

[The bill, H.R. 2745, follows:] 
3 
4 
5 
6 
7 
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Mr. MARINO. And I now recognize the Ranking Member of the 

Subcommittee on Regulatory Reform, Commercial and Antitrust 

Law, Mr. Johnson of Georgia, for his opening statement. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Today’s hearing is an important opportunity to consider the Federal Trade Commission’s critical role in developing and enforcing 

antitrust law. 

Congress first established the Federal Trade Commission in 1914 

to safeguard consumers against anticompetitive behavior by specifically empowering the Commission with the authority to enforce, 

clarify, and develop antitrust law. Under the process of administrative litigation, also known as Part III litigation, the Committee 

may seek permanent injunctions in its own administrative court in 

addition to its ability to seek preliminary injunctions in Federal 

district court. 

This additional authority is a unique mechanism that takes advantage of the Commission’s longstanding expertise to develop 

some of the most complex issues in antitrust law. 

Today, this Subcommittee will consider the Standard Merger and 

Acquisition Review Through Equal Rules, or SMARTER Act. This 

bill would create a uniform standard for preliminary injunctions in 

cases involving mergers, acquisitions, joint ventures, or similar 

transactions and, alarmingly, eliminate the Commission’s centuryold authority to administratively litigate these cases. 

Proponents of the SMARTER Act argue that divergent standards 

for enjoining mergers may undermine the public’s trust in the efficient and fair outcomes of merger cases. But it is unclear that 

these differences are material, let alone that the differences have 

led to divergent outcomes in merger cases. 

In the absence of any evidence, it is difficult to support wholesale 

changes to longstanding antitrust practices at the FTC for consistency’s sake alone based solely on speculative harms. But even assuming that there are material differences in cases brought under 

these standards, we should strike a balance in favor of competition 

by lowering the burden of proof in cases brought by the Justice Department, not by raising the Commission’s burden for obtaining 

preliminary injunctions. Courts already require a lower burden of 

proof in cases brought by the Commission and Justice Department 

precisely because both are expert agencies equipped with large 

staffs of economists who analyze numerous mergers on a regular 

basis that may only bring cases that are in the public interest. 

To the extent that we should address perceived differences in the 

standard for preliminary injunctions in merger cases, legislation 

should favor increased competition, not the interest of merging parties. 

The SMARTER Act would also eliminate the FTC’s authority to 

administratively litigate mergers and other transactions under Section 5(b) of the FTC Act. Leading authorities in antitrust across 

party lines have expressed serious reservations with eliminating 

the Commission’s administrative litigation authority. 

For instance, Bill Kovacic, a former Republican chair of the Commission, has referred to this aspect of the bill as ‘‘rubbish,’’ noting 

that the Commission has used administrative litigation to win a 

string of novel antitrust cases that courts have ultimately upheld 
10 

where the Commission has had to fight every single foot along the 

way. 

Edith Ramirez, the chairwoman of the FTC, likewise wrote last 

Congress that eliminating the FTC’s administrative litigation authority would ‘‘fundamentally alter the nature and function of the 

FTC.’’ 

In light of these concerns, I sincerely hope that we can work to 

find an evenhanded solution that promotes competition in the market and protects the public interest. 

And with that, I thank the Chairman, and I yield back. 

Mr. MARINO. Thank you, Mr. Johnson. 

The Chair now recognizes the Chairman of the full Judiciary 

Committee, Mr. Bob Goodlatte of Virginia, for his opening statement. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

I believe our Nation’s antitrust laws serve an important function 

in rooting out anti-competitive and discriminatory behavior in the 

marketplace. I also believe that to be effective, these laws must be 

administered fairly and consistently. 

Today’s hearing focuses on the ‘‘Standard Merger and Acquisition 

Reviews Through Equal Rules Act,’’ or the ‘‘SMARTER Act,’’ which 

makes important reforms to ensure that our antitrust laws are 

prosecuted in this manner. Specifically, the bill amends the standards and processes applied to proposed transactions so that they 

are no longer determined by the flip of a coin. 

One of the responsibilities of the Judiciary Committee is to ensure that the enforcement of our Nation’s antitrust laws is fair, 

consistent, and predictable. We discharge this responsibility 

through vigorous oversight of the antitrust enforcement agencies 

and vigilant supervision of the existing antitrust laws. To assist 

the Committee in its antitrust oversight, the Antitrust Modernization Commission was formed and charged with conducting a comprehensive examination of the antitrust laws and existing enforcement practices. 

Following this review, 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. 

One of the issues the AMC examined was the existing disparities 

in the standards applied to, and processes used by, the Department 

of Justice and the Federal Trade Commission when they seek to 

prevent the consummation of a proposed transaction. 

As the AMC report states, ‘‘Parties to a proposed merger should 

receive comparable treatment and face similar burdens regardless 

of whether the FTC or 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.’’ 

The subject of today’s hearing, the SMARTER Act, solves the 

issue highlighted by the AMC. Specifically, the bill eliminates the 

disparities in the merger review process so that companies face the 

same standards and processes regardless of whether the FTC or 

DOJ reviews their proposed transaction. 
11 

The SMARTER Act contains two principal reforms to the antitrust laws. First is the harmonization of the preliminary injunction 

standards that DOJ and the FTC must meet in court. The second 

reform is the removal of the FTC’s ability to pursue administrative 

litigation following judicial denial of a preliminary injunction request. 

The Department of Justice cannot conduct administrative litigation, and it is unfair for some parties to be subject to administrative litigation while others avoid this prospect merely as a result 

of the identity of the reviewing antitrust enforcement agency. Notably, the removal of the FTC’s administrative powers is constructed 

narrowly and applies solely to the context of merger review cases. 

The AMC recommended this removal and went on to state, 

‘‘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.’’ 

The SMARTER Act is a common-sense, straightforward measure 

that implements reforms advanced by the bi-partisan members of 

the AMC. Furthermore, it is an important step to achieving this 

Committee’s goal of ensuring our Nation’s antitrust laws are enforced in a manner that is fair, consistent, and predictable. 

I look forward to hearing today’s testimony from our esteemed 

panel of witnesses regarding the SMARTER Act, and I yield back 

the balance of my time. 

Mr. MARINO. Thank you, Chairman Goodlatte. 

The Chair recognizes the full Judiciary Committee Ranking 

Member, Mr. Conyers of Michigan, for his opening statement. 

Mr. CONYERS. Thank you, Mr. Chairman, and to my colleagues. 

This so-called SMARTER Act would make the Federal Trade Commission adhere to the same merger enforcement procedures as the 

Justice Department’s Antitrust Division for proposed mergers, acquisitions, and other similar transactions. There are several reasons that lead me not to recommend this measure. 

By weakening the Commission’s independence this bill, in fact, 

undermines Congress’ original intent in creating the Commission 

in the first place. For good reasons that are still relevant today, 

Congress established the Commission to be an independent administrative agency, and we must be mindful of these reasons as we 

consider arguments in favor of the SMARTER Act. 

Even though the Justice Department’s antitrust enforcement authority already existed at the time the Congress created the Commission in 1914, Congress established this agency in direct response to the Department’s failure to enforce the Sherman Antitrust Act of 1890, as well as the Act’s perceived failure to stop the 

wave of mergers and corporate abuses that occurred during the 24 

years following its enactment. 

The Commission is an independent body of experts tasked with 

the developing antitrust law and policy free from political influence 

and particularly executive branch influence. Congress specifically 
12 

gave the Commission broad administrative powers to investigate 

and enforce laws to stop unfair methods of competition, as well as 

the authority to use an administrative adjudication process to help 

it develop policy expertise rather than requiring the Commission to 

try cases before a generalist Federal judge. 

Unfortunately, the SMARTER Act, rather than strengthening the 

Commission’s authority, does the opposite. 

A greater concern is the act’s elimination of the administrative 

adjudication process for merger cases under Section 5(b) of the Federal Trade Commission Act. By doing so, the bill effectively transforms the Commission from an independent administrative agency 

into another enforcement agency indistinguishable, in fact, from 

the Justice Department. 

The Commission’s administrative authority is designed to serve 

its role as an independent administrative agency. Eliminating it, 

therefore, threatens the Commission’s distinctive role and independence. Make no mistake, eliminating the Commission’s administrative authority opens the door for ultimate elimination of the 

Commission’s role in competition and antitrust enforcement and 

policy development. 

You don’t have to take my word for it alone. While supporting 

the bill’s harmonization of preliminary injunction standards applicable to two antitrust enforcement agencies, the former Republican 

Commission Chairman has also publicly said that the rest of the 

SMARTER Act is ‘‘rubbish.’’ The former Chairman understood the 

ultimate effect of the SMARTER Act, and so do I, when he commented, let me put it this way, behind the rest of the SMARTER 

Act is the fundamental question of whether you want the Federal 

Trade Commission involved in competition law. 

Similarly, Commission Chairwoman Ramirez observed last year 

that the bill would have far-reaching immediate effects and fundamentally alter the nature and function of the Commission, as 

well as the potential for significant unintended consequences. 

So, finally, the SMARTER Act is problematic because it may 

apply to conduct well beyond large mergers, which could further 

curtail the Commission’s effectiveness. In particular, the SMARTER Act would eliminate the Commission’s authority to use administrative adjudications not just for the largest mergers, but for any 

‘‘proposed merger.’’ 

It also removes such authority to review a joint venture or similar transaction. Moreover, the measure could be read to eliminate 

the use of administrative processes for already consummated acquisitions, joint ventures, and other types of transactions that are not 

mergers as currently drafted. 

I recognize that the bill’s authors have tried in good faith to respond to some of the concerns expressed by myself and by the Commission last year in response to an early draft of the SMARTER 

Act, and I appreciate these efforts. Moreover, I recognize that the 

Commission itself earlier this year changed its procedural rules to 

make it easier to end the use of administrative litigation where it 

loses a preliminary injunction proceeding in court. 

My disagreement with the sponsors, however, is more fundamental, at least regarding whether the Commission should retain 

its administrative litigation authority at all in merger cases. This 
13 

disagreement leads me to oppose the so-called SMARTER Act, even 

in its written form. 

I thank the Chair and yield back my time. 

Mr. MARINO. Thank you, Mr. Conyers. 

Without objection, other Members’ opening statements will be 

made part of the record. 

Would the witnesses please rise to be sworn in and raise your 

right hand? 

Do you swear that the testimony you are about to give before 

this Committee is the truth, the whole truth, and nothing but the 

truth, so help you God? 

Let the record reflect that the witnesses have answered in the 

affirmative. 

Please be seated. 

I am going to begin by introducing all of the witnesses, and then 

we will come back for your opening statements. If I mispronounce 

your name, please do not hesitate to tell me. 

Our first witness is Ms. Garza, the co-chair of Covington & 

Burling’s antitrust and competition law practice group. In private 

practice, she has been involved in some of the largest antitrust 

matters in the last 30 years, and many other litigation and regulatory matters on behalf of Fortune 500 companies. Before joining 

Covington, Ms. Garza served as acting Assistant Attorney General 

in charge of the Antitrust Division at the Department of Justice. 

Ms. Garza also was appointed by President George W. Bush to 

chair the Antitrust Modernization Commission, a bipartisan, blueribbon panel created by Congress to study and report to the President and Congress on the state of antitrust enforcement in the 

United States. The AMC report has been widely praised for providing a valuable framework for policy proposals. 

Ms. Garza received her B.S. from Northern Illinois University 

and her J.D. from the University of Chicago. 

Welcome, Ms. Garza. 

Mr. Clanton as the senior counsel at Baker & McKenzie, where 

he also served as head of the firm’s global and North American 

antitrust practice groups. Mr. Clanton has over 30 years of experience representing clients in high-profile and complex antitrust matters. Prior to joining the law firm, Mr. Clanton served as a commissioner and acting chairman of the Federal Trade Commission. 

Mr. Clanton received his B.A. from Andrews University and his 

J.D. from Wayne Law School, where he served on law review. 

Welcome, Mr. Clanton. 

Mr. Tad Lipsky is a partner in the Washington, D.C., office of 

Latham & Watkins. He is recognized internationally for his work 

on both U.S. and global antitrust law and policy, and has handled 

antitrust matters throughout the world. 

Before Latham & Watkins, Mr. Lipsky served as the chief antitrust lawyer for the Coca-Cola Company for 10 years. Mr. Lipsky 

also served as Deputy Assistant Attorney General under William 

F. Baxter, who sparked profound antitrust law changes while serving as President Reagan’s Chief Antitrust Official. 

Mr. Lipsky received his B.A. from Amherst College, his M.A. 

from Stanford University, and his J.D. from Stanford Law School. 

Welcome, sir. 
14 

Our final witness is Mr. Bert Foer, the founder and former president of the American Antitrust Institute. Prior to founding AAI, 

Mr. Foer served in both private and public capacities in the antitrust field. His public service includes serving as the Assistant Director and Acting Deputy Director of the Federal Trade Commission’s Bureau of Competition. His private sector experience includes working at Hogan & Hartson, serving as the CEO of a 

midsize chain of retail jewelry stores, working in various trade associations and nonprofit leadership positions, and teaching antitrust to undergraduate and graduate business school students. 

Mr. Foer received his B.A. magna cum laude from Brandeis University, and M.A. in political science from Washington University, 

and his J.D. from the University of Chicago Law School where he 

was an associate law review editor. 

Welcome, sir. 

Each of the witnesses’ written statements will be entered into 

the record in its entirety. I ask that each witness summarize his 

or her testimony in 5 minutes or less. And to help you with that, 

you have timing lights in front of you. A light will switch from 

green to yellow, indicating that you have 1 minute to conclude your 

testimony. And when the light turns red, it indicates that the 

witness’s 5 minutes have expired. When it gets to the point of 

when the light flashes red, I know you are intent on getting in your 

statement, I will politely pick up my hammer and just give you a 

little indication to please wrap up. 

Ms. Garza, your 5-minute opening statement, please? 

TESTIMONY OF DEBORAH A. GARZA ESQ., PARTNER, 

COVINGTON & BURLING LLP 

Ms. GARZA. Thank you, Chairman Marino, Vice Chairman 

Farenthold, and Members of the Judiciary Committee and the Subcommittee. It is a pleasure to testify in support of the SMARTER 

Act as the former chair of Congress’ Antitrust Modernization Commission. That Commission was a 12-member bipartisan, blue-ribbon panel comprised of six Democrats, five Republicans, and one 

independent. It was a bipartisan panel. We were an engaged group 

of experienced practitioners, several former enforcers and zealous 

advocates of strong antitrust enforcement, including a former general counsel of the Federal Trade Commission during the Clinton 

administration, and two former heads of the Antitrust Division 

during Democratic administrations. 

So I wanted to put that out there. It is not in my opening statement, but I wanted to be clear that we were Congress’ committee 

and we were structured to be bipartisan, and that is the way that 

our recommendations came out. 

The AMC made three recommendations, each of them with bipartisan support, that relate to the subject matter of this hearing, 

which is creating greater parity between the DOJ and the FTC 

with respect to merger enforcement. 

One recommendation was that the FTC should adopt a policy 

that when it seeks to block a merger, it should seek both a preliminary injunction and permanent relief, and consolidate those two 

into a single hearing as long as agreement can be reached between 

the enforcement agency and the parties on an appropriate sched-
15 

uling order. All of the commissioners joined in that recommendation, with the exception of one Democrat, so five Democrats joined 

in that recommendation. 

Second, the AMC recommended that Congress should amend Section 13(b) of the FTC Act to prohibit the Federal Trade Commission 

from pursuing further administrative litigation if it lost its motion 

for a preliminary injunction. One Democratic Commissioner declined to join on the basis that, at the time, the FTC had adopted 

a policy statement saying that it would rarely actually pursue administrative proceedings after losing a preliminary injunction motion. 

I should say that that policy statement, which was in place at 

the time of the AMC vote, was revoked. This was the Pitofsky rule 

that Mr. Lipsky refers to in his testimony, and I do in mine. 

Third, the AMC recommended that Congress act to ensure that 

the same standard for the grant of a preliminary injunction apply 

to both the FTC and the DOJ. Five Democrats joined in that recommendation. 

The SMARTER Act accomplishes the objectives of each of these 

recommendations. The premise of the AMC recommendations and 

the SMARTER Act is very simple: Mergers should not be treated 

differently depending on which agency happens to review it. The 

regulatory outcome should not be determined by an agency flip of 

the coin. 

I would like to emphasize that this is not anti-enforcement legislation, at least not by the lights of the AMC. We regard it to be 

pro-enforcement. We regarded that legislative change was important to maintain consensus about the value of a strong enforcement 

regime and that a perception of unequal or unfair treatment undermines that consensus. 

Chairman Goodlatte had this in his statement, but I want to 

read the carefully crafted words of the Commission in explaining 

its recommendation. ‘‘Parties to mergers should receive comparable 

treatment and face similar burdens, regardless of whether the FTC 

or the DOJ reviews the merger. A divergence undermines the public trust that the antitrust agencies will review transactions efficiently and fairly. More importantly, it creates the impression that 

the ultimate decision as to whether a merger may proceed depends 

in substantial part on which agency reviews a transaction. In particular, the divergence may permit the FTC to exert greater leverage in obtaining parties’ assent to a consent decree.’’ 

In closing, I would like to say that no one on the AMC believed 

at the time, and I do not believe today, that this legislation would 

make it difficult or impossible for the Federal Trade Commission 

to do its job. The Justice Department has done very well in pursuing its merger enforcement agenda working with the standards 

that apply to it. And I firmly believe that the Federal Trade Commission can do so as well. Thank you. 

[The prepared statement of Ms. Garza follows:] 
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Mr. MARINO. Thank you, Ms. Garza. 

Mr. Clanton? 

TESTIMONY OF DAVID A. CLANTON, ESQ., SENIOR COUNSEL, 

BAKER & McKENZIE LLP 

Mr. CLANTON. Thank you, Mr. Chairman, and Members of the 

Committee. 

As you mentioned before, I served on the Commission right after 

the HSR Act was passed, and when we put into place the procedures, which largely are still there today after nearly 40 years. 

And let me explain just briefly why I think this legislation is 

right on point. It is targeted. It deals with an issue of fairness that 

I will explain. And it does not—it does not, I emphasize that—create any wholesale revision to the FTC’s administrative process. 

This legislation will focus only on proposed mergers, which essentially are reportable and nonreportable mergers under the HSR 

Act. And when Congress passed that statute, it created essentially 

a unified structure for how proposed mergers are to be reported to 

the FTC and the timelines the FTC has and DOJ, because both 

agencies are equally involved in that process. The administration 

of the statute is jointly managed. The FTC is the lead manager in 

terms of the whole reporting process, but Justice has to concur. 

In addition to that, over the years, the two agencies for reportable mergers have developed very extensive, substantive merger 

guidelines that the courts increasingly are accepting and have 

adopted. 

So you really have a very unique structure that is specific to this 

idea and to this whole concept of how merger review should take 

place. 

And let me just then go on to talk about what happens in this 

process. So the parties file merger notifications with both agencies. 

Both agencies then determine which agency is going to review it. 

Sometimes you know that in advance. Many times you don’t know 

that in advance. So it could go to one agency or another. 

After that, if there are antitrust concerns, which is why you end 

up in litigation, there is a very extensive discovery process, what 

we call a second request. And the whole process goes on for many, 

many months, typically 6 months or longer. And at the end of that, 

if there is a problem and the parties cannot work out a settlement, 

either the FTC or DOJ, depending on the agency, decides if they 

have to go to court. 

And here is where the differences start to take place. They 

haven’t occurred previously, but here the FTC has one process 

where they can go to court and seek a preliminary injunction. And 

if they get that, then they move forward on their administrative 

proceeding. 

By contrast, DOJ goes into court exclusively, and what has happened over recent years, instead of seeking a preliminary injunction, the parties typically agree, and it is a hearing on the merits. 

And that hearing encompasses all of the substantive issues, and 

DOJ bears the burden of proving a violation of Section 7 of the 

Clayton Act. So you have a significant contrast right there. 
27 

And let me just explain briefly on the administrative process for 

the FTC, they go into court. They seek a preliminary injunction. 

That preliminary hearing may take several months. 

There is a case that I mention in my testimony that is going on 

right now involving Sysco and U.S. Foods. That case was brought 

in February. The decision is probably going to happen fairly soon 

from the district court judge. The FTC administrative proceeding 

doesn’t start until July 21 of this year, 5 months after the case was 

filed. 

If you just look at the FTC rules, that case will then last for another 7 months. And at that point, it will probably be, based on the 

history of how long it takes DOJ cases which are on the merits, not 

a preliminary injunction, in the range of 5 or 6 months. And I give 

two examples of two cases where that happened, two significant 

cases, by the way. 

So to get to the point quickly, just using those examples, and we 

could come up with others, the FTC administrative process takes 

roughly twice as long as it does to go into Federal court. And at 

the end of the day, the FTC hearing probably ends on a preliminary injunction decision. If the companies lose, they don’t have the 

time. They have already probably invested a year-plus of the deal 

defending this and going through the investigative process. And at 

the end of that, they face another 7 months, not to mention potential judicial review. 

So the process is inherently unfair and differential, and that is 

what the legislation seeks to change. And I think that makes 

sense. The FTC has all the authority in the world and has a lot 

of experience in bringing cases in Federal court. They are not going 

to be harmed by this. 

Thank you. 

[The prepared statement of Mr. Clanton follows:] 
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Mr. MARINO. Thank you, Mr. Clanton. 

Mr. Lipsky, your statement, please? 

TESTIMONY OF ABBOTT B. LIPSKY JR., ESQ., PARTNER, 

LATHAM & WATKINS LLP 

Mr. LIPSKY. Thank you, Mr. Chairman. I am very honored to be 

asked to testify today. I am glad to appear before you. 

I just wanted to quickly echo some of the comments of the previous witnesses. I think I speak for everybody at the witness table 

here in saying that we all think that the United States was very 

wise to choose competition and vigorously enforced antitrust law as 

the main rule of economic organization for the United States. It is 

one of the things that has helped make the United States the leading economic powerhouse and innovator that it is today. 

And I think if any of us thought that there was any possibility 

that this bill would diminish the value of the antitrust laws and 

antitrust agencies, we wouldn’t be here testifying in support. 

But I do testify in support like my colleagues, Mr. Clanton and 

Ms. Garza, because this bill I think very responsibly and in a very 

limited fashion corrects a very evident unfairness and an illogical 

aspect of the way that the procedures have come to work. 

You will see my statement that I have taken this over a bit of 

history. I guess I have gotten to the point where I know more history than most people that are around. That is not a good comment. But this concern particularly about the use of administrative 

litigation following an FTC proceeding in court, it is actually based 

on some very tangible negative experience. And you will see I discuss the RR Donnelly, Meredith/Burda merger, which was proposed 

in 1989 and went through administrative litigation, which took 6 

years. And ultimately, the Commission decided that the district 

court had been right in declining to enter a preliminary injunction. 

And I also mentioned a case involving the Dr Pepper soft drink 

brand, an administrative litigation where the FTC actually won a 

preliminary injunction under Section 13(b) in 1986. And despite a 

declaration from the D.C. Circuit that that matter was moot because it was originally proposed to be acquired by the Coca-Cola 

Company, that was the merger that was enjoined. And then the Dr 

Pepper brand was sold off, eventually combined with the 7-Up 

brand to form the Dr Pepper Seven-Up Company. 

But while all that wonderful soft drink industry history was proceeding, the Federal Trade Commission was going along with an 

administrative litigation. So the RR Donnelly case and the Dr Pepper case happened to culminate at about the same time, which was 

about 1995, shortly after Bob Pitofsky had been appointed Chairman of the Federal Trade Commission by President Clinton. 

Bob Pitofsky knows a tremendous amount about the antitrust 

laws and before coming to the Commission as Chairman had been 

in several roles there, including as a commissioner in a prior administration. And he very wisely, I think, issued the so-called 

Pitofsky rule, 16 CFR 3.26, the policy statement. 

Now the policy statement, if you read it carefully, is a little bit 

cagey. It doesn’t make any commitments, but it does say that the 

decision to proceed to administrative litigation following a loss of 

preliminary injunction would be considered on a case-by-case basis. 
36 

And in the context of those two merger cases where the use of 

administrative litigation had been very heavily criticized in the 

bar, it was understood to essentially acknowledge the unfairness 

and the irrationality of having a situation where if your merger is 

judged in the Justice Department, you end up in a judicial proceeding, whereas if you are judged in the Federal Trade Commission, you face the possibility of this nearly endless administrative 

litigation. In the Dr Pepper situation, it was 9 years, and that was 

even before the final disposition by the appellate court. 

So I think the Pitofsky rule was wise. I think that the Commission has largely acted in accordance with the Pitofsky rule. And all 

the SMARTER Act would do, really, is codify I think what is FTC’s 

better judgment that if there is a loss in the district court, it is best 

that administrative litigation be foregone. 

It is true that Congress originally foresaw a very special role in 

creating this administrative litigation for the FTC. But we also 

have to take into account that when the 13(b) statute, the injunction statute, was passed in 1973, it did provide the Commission 

with the possibility to seek a permanent injunction in the Federal 

district court. So the Commission has a very clear and obvious 

available authority so that it could decide to go to the district court. 

I will stop there. Thank you. 

[The prepared statement of Mr. Lipsky follows:] 
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Mr. MARINO. Thank you, Mr. Lipsky. 

Mr. Foer, your statement, please? 

TESTIMONY OF ALBERT A. FOER, ESQ., SENIOR FELLOW, 

AMERICAN ANTITRUST INSTITUTE 

Mr. FOER. Thank you, Mr. Chairman, Members of the Committee. 

In previous hearings on the SMARTER Act, you heard from Professor John Kirkwood, like myself, a senior fellow of the American 

Antitrust Institute, and similarly well experienced at the FTC, albeit years ago. We sent the Committee a letter, and that is attached. This is a year ago, so that is attached to the testimony, and 

I understand it will be included. 

Our position on this legislation, though, has not changed. Put 

simply, we do not think that the case has been made for new legislation. I will give three reasons. 

First, while we agree there is no need for differently articulated 

standards for obtaining a preliminary injunction, we do not perceive that the differences between the FTC and the Justice Department that are addressed by this bill are differences that, in fact, 

make a difference. 

Federal courts generally require both agencies to make strong 

showings of probable anticompetitive effect before a preliminary injunction is issued. In actual practice, it rarely if ever occurs that 

a merger outcome is influenced much less determined by the theoretically more lenient public interest test for a preliminary injunction under Section 13(b) of the FTC Act. 

Second, if a single theoretical standard is somehow deemed so 

important, then we suggest, as I think Ranking Member Johnson 

suggested, that it would make more sense to modify the DOJ 

standard to conform to the FTC standard, so that the Department 

of Justice would share the presumption of expertise that is implicit 

in the FTC standard. 

And third, prudence compels caution. I sound like a real conservative here. Prudence demands caution when tinkering with the system of dual enforcement, including but not limited to administrative adjudication at the FTC. This system emerged out of robust 

debate during the 1912 presidential election campaign. Congress 

then was concerned about leaving antitrust enforcement exclusively 

in the hands of generalist judges, preferring to establish a sister 

administrative agency with group decision-making by a body of experts. 

It is no accident that modern merger law has been the result of 

administrative guidelines developed jointly by the two antitrust 

agencies rather than by judicial interpretations. It is administrative guidelines to which both agencies are particularly well-qualified to contribute which are the key to predictability and efficiency 

in merger controls. 

Administrative adjudication of mergers offers an important outlet 

for the application of such guidelines. 

Because of differences in the agency statutes and procedures, 

special care must be taken to foresee possible unintended consequences. To mention one such risk that can probably be fixed by 

additional drafting, consummated transactions involving nonprofit 
48 

organizations, such as some important hospital mergers, might be 

precluded from administrative adjudication by the FTC. I don’t 

think that is intended. I don’t think it would be wise. 

But more important, if Congress takes away the FTC’s administrative adjudication for mergers, it could be starting down one of 

those slippery slopes where brakes are likely to fail. 

The Clayton Act Congress and the FTC Congress were one and 

the same. Those farsighted legislators valued a competitive marketplace, which they saw endangered by ever-growing commercial establishments with ever-growing economic and political power. And 

they became convinced that having two agencies conceived with different structures share the responsibility, that that would be best 

to ensure the competitive economy they wanted to maintain. 

We at the AAI believe that the DOJ and FTC have contributed 

importantly to the evolution of merger law and policy, both as cooperators in a joint enterprise and occasionally as rivals, motivated 

by the desire to outshine the other in the public eye. 

In this regard, I might mention that the FTC has shown that it 

has already heard the criticisms of the Antitrust Modernization 

Commission by taking important steps, including 3.26 of its rules 

to make their process both fairer and quicker. 

So why act now? Why not let the FTC continue to work its way 

through? We have not seen a lot of examples of problems, and the 

examples we see are very old and before the FTC took its lessons 

from the modernization commission. 

So I say, why fix a wheel that simply ain’t broke? 

Thank you for, again, listening to our views. 

[The prepared statement of Mr. Foer follows:] 
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Mr. MARINO. Thank you, sir. 

We begin now with our questioning for 5 minutes. I am going to 

ask each of the Members to keep their questions to 5 minutes. 

Please bear in mind that we like to get to ask each of you a question, so keep your answers as succinct as possible. 

I am going to begin with Ms. Garza, please. Ms. Garza, some 

suggest that the SMARTER Act will make merger enforcement 

more difficult for the FTC. Do you think DOJ is effective at preventing anticompetitive transactions? And is there any reason to 

think that the FTC cannot be equally as effective operating under 

the same rules? 

Ms. GARZA. Congressman, I think the FTC can be equally effective, and they have shown themselves to be in a number of cases. 

The way it works now is that after investigating a transaction 

pursuant to the HSR Act, as Mr. Clanton has mentioned, after undertaking discovery and investigating for 3, 4, 6, 8, 12 months, the 

Justice Department then generally goes to court, if it believes there 

is a problem. And it produces its evidence and has been successful 

in a number of cases in proving its case or in extracting a consent 

judgment from the parties that it feels adequately addresses the 

issues. 

There is no reason why the Federal Trade Commission that has 

the equal ability to get the same discovery for the same length of 

time cannot do the very same thing, go into a Federal court, prove 

that a merger is anticompetitive, and prevail in that way. 

All we are talking about here is basically giving the parties a 

chance to actually have that day in court. The concern is that the 

deal will not hold together. The concern is that the FTC has the 

ability and has been exploiting the process to try to win, not by the 

merits but by the process, and that is a problem. 

Mr. MARINO. Thank you. 

Mr. Clanton, the FTC recently reinstated the Pitofsky rule that 

purports to create a higher threshold for proceeding with administrative litigation against a proposed transaction. 

Do you believe this rule is sufficient on its own, or is the 

SMARTER Act still necessary? 

Mr. CLANTON. Mr. Chairman, I think the change made sense. 

The Commission did the right thing. But it only dealt with one part 

of the problem, and that relates to transactions where the Commission loses and the parties close the transaction and the Commission continues to litigate. I think they have not done that in a long 

time. 

There were some bad examples going back a few years, but my 

concern really is what happens when the FTC wins and then you 

start another phased administrative hearing that ends up doubling 

the length of time that you would have if you went into Federal 

court directly on the merits. 

Mr. MARINO. Thank you, sir. 

Mr. Lipsky, in your testimony you discussed two cases where the 

FTC pursued administrative litigation after a Federal court ruling. 

In one case, the FTC continued administrative litigation for nearly 

6 years after a Federal court denied its preliminary injunction request. In the other, the FTC continued administrative litigation 
57 

after they had won in Federal court and the parties abandoned the 

transaction. 

Would these administrative litigation cases have been allowed to 

continue if the SMARTER Act was enacted into law? 

Mr. LIPSKY. No, Mr. Chairman. I think they would be prohibited 

by the SMARTER Act, and I think that is the great virtue. 

I think the intent of the Pitofsky rule and the revision enacted 

this year is to try to achieve that same result. And I think this act 

is an improvement over the mere administrative policy statements, 

because it gives parties the assurance that the Commission will, indeed, act as it suggests it will act in these policy statements. 

And we have to remember that in 2008, there was a retrenchment. I believe Ms. Garza mentioned that they actually reversed 

the Pitofsky rule for a time back in 2008 when they were focusing 

on the acceleration of administrative litigation and involving the 

Commission much more directly in the conduct of the hearings. 

So this is a classic example of a good policy that the Commission 

has followed since 1995, by and large. But one of the primary merits of the legislation is that it would give parties the assurance that 

the Commission would adhere to that sound policy. 

Mr. MARINO. Mr. Foer, in 20 seconds, why should some companies be subject to FTC standards and processes and others to DOJ 

standards and processes? Does having different standards and 

processes result in fair and consistent enforcement for our antitrust 

laws? 

Mr. FOER. I am not certain I understood the question. 

Mr. MARINO. Having different standards and processes, is that 

fair and consistent? 

Mr. FOER. The question is theoretical because, in theory, there 

are some differences. But my point is that, in fact, the way things 

work, these differences don’t really make a difference and are not 

sufficiently large, in view of the downside potentials, to justify legislation right now. 

Mr. MARINO. Thank you, sir. 

The Chair now recognizes the Ranking Member, the gentleman 

from Georgia, Mr. Johnson. 

Mr. JOHNSON. Thank you, Mr. Chairman. 

Ms. Garza, in your statement, you write, ‘‘The premise of 

SMARTER is simple. A merger should not be treated differently 

depending on which antitrust enforcement agency, DOJ or FTC, 

happens to review it. Regulatory outcomes should not be determined by a flip of the merger agency coin.’’ 

I was puzzled by your characterization of how the agencies go 

about determining which one will assert jurisdiction. 

Can you explain what you mean by the flip of a merger agency 

coin? 

Ms. GARZA. Representative Johnson, there was a time when, I 

can honestly tell you, we seriously discussed coin flips when I was 

at the Justice Department. 

The issue is that, by and large, the FTC and the DOJ have concurrent jurisdiction to review a merger. 

Mr. JOHNSON. And they have determined between themselves 

when they will assert jurisdiction over a particular matter, depend-
58 

ing upon each agency’s decades of experience over the relevant 

merging parties’ industry. Isn’t that correct? 

Ms. GARZA. Not exactly. There are some industries that tend to 

be looked at by one agency. 

Mr. JOHNSON. Well, then in those instances where it can’t be determined, the agencies go through a careful process outlined by the 

antitrust laws and in some cases implemented through the Code of 

Federal Regulations. Isn’t that correct? 

Ms. GARZA. I am not sure I caught all of that. But what I would 

suggest to you is that it is not always—— 

Mr. JOHNSON. Well, I guess what I am suggesting is that it is 

a little bit more than just simply a coin flip in 99.9 percent of the 

cases. Isn’t that correct? 

Ms. GARZA. I probably don’t agree with you on that. But I would 

ask you the question of why should one industry like the paper industry be subjected to a different standard than, I don’t know, another industry, like the pharma industry. 

The problem is, if you are going to have two very diametrically 

different processes, Congress should consider, well, is there a reason why one industry—let’s just assume, for the sake of argument, 

that—— 

Mr. JOHNSON. Well, I don’t want you to take up all of my time. 

Ms. GARZA. Okay, I don’t want to do that either. I can follow up 

in writing. 

Mr. JOHNSON. Okay. 

I would like to hear Mr. Foer’s response to what you have said 

in response to my questions. 

Mr. FOER. Look, I would say that, I said before, there is a theoretical difference in the standards of how a preliminary injunction 

can be issued. But in point of practice, that doesn’t seem to make 

much difference. 

So the real difference comes down to whether or not the FTC 

ought to be able to bring a case in front of the administrative process. And yes, that does take time. 

But one question we should look at, and the elephant in the 

room, I think, is what do we want our merger policy to be? We are 

only talking about less than 3 percent of those mergers big enough 

to notify get a second request. And only about half of those, about 

1.5 percent a year, go through any kind of process that leads to a 

change in the terms or to stopping a merger. 

So it is a very small percentage of just those mergers that are 

really important for the country. 

Now, how much time do we think we should spend on understanding those mergers? If we spend very little time by rushing it 

through preliminary and final injunctions, which is the way we try 

to do it, then we are giving the advantage to the merger. If we take 

a lot of time, we are giving advantage to the government. We need 

to find the right balance. 

I think the FTC has a pretty good balance here, which says—— 

Mr. JOHNSON. Well, let me ask then, Mr. Lipsky, you cited a couple cases—and excuse me for interrupting—one back in 1987 and 

the other in 1991. Can you cite any more recent cases that show 

where the FTC continuing to litigate after a preliminary injunction 
59 

has been denied has worked an undue hardship on one of the parties due to the length of time? 

Mr. LIPSKY. I think probably the lead example of where the Commission was using its administrative procedures to really put tremendous pressure on the parties is the more recent Inova case. 

As I mentioned, since the issuance of the Pitofsky rule in 1995, 

the Commission has been pretty good about adhering to that rule. 

It is just their persistent declining to affirm that that would be the 

rule—they say they have discretion to do what they have been 

doing, but they will never quite promise to do what they have been 

doing. I think that is where this legislation would really give the 

assurance to all the businesses that have to think about and plan 

for this process that is necessary to establish the rationality of the 

enforcement regime. 

Mr. JOHNSON. Thank you. I yield back. 

Mr. MARINO. Thank you, Mr. Johnson. 

The Chair now recognizes the other gentleman from Georgia, Mr. 

Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. 

I appreciate this hearing, again. As we have done a lot, it is time 

to get some stuff that we have done last Congress, it is time to get 

it again this Congress. Let us move some stuff forward. So I am 

hoping this will lead toward mark up and lead toward the floor, because we have had a very similar hearing to this last year. In fact, 

I think three of you were witnesses in the last hearing we did on 

this. 

But I want to make it clear that I am strongly in favor of a 

strong antitrust enforcement to prevent anticompetitive behavior, 

as I think are most the Members here today. 

But that said, Mr. Lipsky you mentioned in the last hearing, and 

we do go back and actually look at those, but it stuck with me. You 

said that, in some cases, the cost and duration of administrative 

litigation can discourage stakeholders from behavior that is actually procompetitive. 

Now, I don’t know if you still feel that way or not, but it did stick 

with me at that point. 

You seem to want to make a comment. Do you still feel that way? 

Mr. LIPSKY. Yes, absolutely. 

Mr. COLLINS. I think that is the interesting thing, because we 

don’t want to do something in preventing anticompetitive behavior 

and get into discouraging procompetitive behavior. I believe this 

bill is a step in the right direction to ensure that, and I think that 

our antitrust laws and enforcement efforts are functioning effectively. 

So I think some questions I want to follow up on, Ms. Garza, as 

you know, in the 2003 Antitrust Modernization Commission report, 

it stated that parties to a proposed merger should receive comparable treatment and face similar burdens, regardless of whether 

it is FTC or DOJ reviews of the merger, and highlighted that differing treatment could undermine the public trust that transactions are reviewed efficiently and fairly. 

Last Congress, we discussed the importance of the process. I 

want to touch on that again. In your opinion, is there a real or per-
60 

ceived disparity in enforcement by the two agencies? And how does 

the process play into that disparity? 

Ms. GARZA. So it is clear that there is a perception that there is 

a disparity. We heard that over and over again in testimony before 

the Commission, and it was something that the commissioners believed. As I mentioned, a lot of our commissioners are very experienced both in the government enforcement side and the advisory 

side. 

I believe that if you sat down in a bar with folks over at the DOJ 

and the FTC and have a discussion with them, they would agree 

with you, too. 

The fact of the matter is that in one case, if I am at DOJ, I am 

able to count on, if I want to, being able to have a day in court. 

I know that the DOJ is going to agree to do a consolidated preliminary injunction, permanent injunction hearing. It is going to take 

a while. It could still take more than a year, which is a long time 

to hold a deal together, but I know that I am going to get a hearing. There is some certainty. 

If I am at the Federal Trade Commission right now, I know that 

I am going to go through that same very lengthy investigation 

process, and then I am going to go to court where they are going 

to seek a preliminary injunction, and I would argue to you that if 

it is in the District of Columbia where a lot of these cases are going 

to be, I am going to have a deferential standard applied, whereas 

Rich Parker described it last year as sort of if it is a tie, the tie 

goes to the FTC, unlike with the DOJ. The DOJ actually has to 

prove its case. 

For the FTC, arguably, all they have to do is get to a tie, and 

then that gets them to an administrative hearing with several 

months more with an ALJ who is an FTC employee, and then possibly to an appeal to the Commission that issued the complaint, 

and then possibly back to the court, which applies a deferential 

standard. That is a difference in process. 

Mr. COLLINS. You just said something that was not in my questions, but you just made a comment that I think highlights a bigger 

issue that goes even beyond this hearing. It is the general perception of the public and what we do up here not only on the Capitol 

Hill and in Congress, but also the administrative agencies and executive branch agencies. 

And what you said—I don’t think you meant what I am going to 

talk about, but I am going to at least take up what you said—is 

the American public today, and whether it is with going through 

agencies that don’t turn over emails or going through problems of 

budgeting, they always feel like the tie goes to the government. 

The tie goes to the government. 

That is an interesting process here where we talk about where 

you said the DOJ has to prove the case. I think what we have to 

do, and I think this bill from my friend from Texas actually does 

that. But I think when we talk about this, whether it is anticompetitive or procompetitive, the government should not be in the 

way. This is not baseball where the tie goes to the—this should not 

be the tie goes to the government. It should be what is best for the 

American people, the very ones who put us here. 
61 

And I think, Mr. Foer, in your testimony, one of things you actually had sort of implied is they try to outshine each other, that basically I think is the way you termed that. 

How do we get by that? I think that is the reason for this hearing. I think that is why this is actually a good bill. 

And that is why, Mr. Chairman, I am proud to have done that. 

But I think you raised a great point on that. 

And with that, Mr. Chairman, I yield back. 

Mr. MARINO. Thank you, Mr. Collins. 

The Chair now recognizes the Ranking Member of the full Committee, the gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman. 

And I thank the witnesses for the discussion here. 

There is a 1989 report on the role of the Federal Trade Commission. The American Bar Association’s Antitrust Law Section recognized that merger enforcement was probably the FTC’s most important antitrust role. 

Mr. Foer, what is your response to that? 

Mr. FOER. Sir, would you mind repeating the case you are talking about? 

Mr. CONYERS. Yes, the American Bar Association’s Antitrust Law 

Section thought that the merger enforcement role was probably the 

FTC’s most important activity as an antitrust provider. 

Mr. FOER. I am sorry, I am not catching on to what rule we are 

talking about here. 

Mr. CONYERS. Mr. Lipsky, are you familiar with that? 

Mr. LIPSKY. I think that is referred to as Kirkpatrick 2. It was 

an ABA report. It was a very broad report on all the functions of 

the FTC, right? 

Mr. CONYERS. Yes. 

Mr. LIPSKY. I think you would probably agree with that or maybe 

you don’t. 

Mr. FOER. I think it was an extremely important document that 

led directly to the rebirth of the FTC as a functioning agency, a 

reputable agency of government. 

Mr. CONYERS. Let me ask this question, Mr. Foer, why might the 

SMARTER Act threaten to create a slippery slope to ending joint 

enforcement of antitrust law by both FTC and DOJ? 

Mr. FOER. The problem is, why do we need an FTC? Ultimately, 

the question would be asked, why do we need a second body to enforce the laws if, for example, the administrative process is considered a failure here? ‘‘It takes too long. We have to make everything 

move faster.’’ 

The slippery slope is that the precedent of removing this power 

of adjudication can lead people to believe that the adjudication is 

not an appropriate way to deal with antitrust cases. For those of 

us who believe in strong antitrust enforcement, and possibly everybody at the table would agree, I don’t know, but I think it would 

be a disaster. 

Mr. CONYERS. Mr. Lipsky, am I reading too much into your comments to suggest that you might not feel too badly if we end the 

FTC’s antitrust enforcement role? 

Mr. LIPSKY. Oh, I wouldn’t support that statement at all. I think 

that is the kind of thing that would require a much more com-
62 

prehensive look at the whole enforcement system. We are just talking about one very limited but impactful aspect of the enforcement 

system and a very targeted way of correcting it, and that is why 

I support the legislation, not because I have any broader argument 

with the existence of the FTC. 

Mr. CONYERS. I am glad to hear that. 

Back to Bert Foer again, why is it important for the FTC to retain its ability to use administrative adjudication in merger cases? 

Mr. FOER. The importance is probably not central, because a lot 

of cases could be dealt with through the preliminary injunction 

route and are. 

But there ought to be and there are reserved under this Commission rule 3.26 the possibility under various circumstances where 

the public interest would actually require holding a trial. And the 

FTC made it clear it won’t use that ability very frequently or very 

easily, but we should not take that possibility away, and especially 

if we see it as being used in a responsible way. 

Mr. CONYERS. Thank you very much. 

And I thank the panel for their comments. 

I yield back, Mr. Chairman. 

Mr. MARINO. Thank you, Mr. Conyers. 

The Chair now recognizes the Congresswoman from the State of 

Washington, Ms. DelBene. 

Ms. DELBENE. Thank you, Mr. Chair. 

Thanks to all of you for being here today. We appreciate your 

time. 

I kind of have a question for everyone, and so we will see how 

we go here, but it could be argued that one of the strengths of administrative litigation is the ability of the Commission to consider 

novel legal theories and employ innovative forms of economic analysis, things that the DOJ may not be able to do. 

So how does the Commission use of innovative evidence and 

novel legal theories advance antitrust law, especially in today’s 

complex and rapidly changing digital economy where there may not 

be precedents out there to rely on? 

I guess I will start with you, Ms. Garza. 

Ms. GARZA. I don’t think I understand the premise of the question. Both the DOJ and the FTC follow the same merger guidelines 

that they have jointly developed and issued. It is not clear to me 

what innovative approaches anyone has in mind with respect to 

mergers, but to the extent that there are any, it is not clear to me 

why the DOJ would be less well placed to pursue them than the 

FTC. 

Ms. DELBENE. Part of, I think, the question has been around 

having people who have expertise in a given area and understanding, and are able to bring that expertise to the table, especially on a newer industry or newer type of technology. 

Ms. GARZA. But then again, what you are suggesting is that—you 

still have the role of the court, of the FTC, in deciding whether or 

not there should be a preliminary injunction. So there is the issue 

of whether they should have a lesser standard. Then it goes to a 

single ALJ, which is an employee of the FTC. 

The question is, why would the ALJ be in any better position to 

assess a merger than any of our judges that we have? 
63 

Bert talks about the difference between a generalist court and a 

specialist court, but the problem, I think what people perceive, is 

that what you are really setting up is a system where you get a 

lower standard for a preliminary injunction, and then it goes to a 

judge who is an employee of the Federal Trade Commission, and 

then it goes to the Commission that issued the complaint in the 

first place. 

I am not aware of any evidence such suggests that somehow or 

other that ALJ is in any better position than would be a district 

court judge in the District of Columbia or any other district to consider the arguments and the evidence that the DOJ or the Federal 

Trade Commission would put forward as to why a transaction 

would be anticompetitive. 

Ms. DELBENE. Okay. Mr. Foer, if I could get your feedback on 

that? 

Mr. FOER. I think that the ALJ problem is a problem. You have 

to make sure that you have top level, top quality ALJs. But an ALJ 

who deals with antitrust issues day in and day out over years is 

likely to be much more expert and much more able to contribute 

to the systematic development of the law than a whole bunch of 

Federal district court judges, many of whom are not trained in economics at all and none of whom get very much experience with 

these cases. Very few Federal district court judges deal with more 

than a few merger cases, let’s say, in any given year or maybe in 

a lifetime in a court. 

So there is a big difference between attempting to develop in a 

systematic, predictable way a pattern of law, and we are doing that 

largely through guidelines, jointly written guidelines, which is 

great, but we are not getting much assistance from the courts in 

developing this body of law. 

There are probably two reasons for that. One I gave you, the lack 

of expertise. But these cases are very fact intensive, and it is hard 

to have appeals or to develop appellate jurisprudence in these 

kinds of cases. In fact, we could have a guess about how long it has 

been since the Supreme Court took on a merger case. I don’t know 

if any of us remember one in our lifetimes. 

So it is very useful, I think, to have a body of experts that can 

handle this law. 

Ms. DELBENE. Thank you. 

Also, Mr. Foer, I think in your testimony you had talked about 

any concern about the SMARTER Act reaching transactions other 

than proposed Hart-Scott-Rodino mergers, so I wondered what your 

thoughts were on that and whether you think the bill would apply 

to other things like consummated transactions or non-merger activity, or move into that area. 

Mr. FOER. Well, I don’t think it is going to apply outside of merger, joint venture, and whatever similar transactions might mean, 

although that in itself is an interesting question. 

It could give rise to some litigation down the road of what is covered and what is not covered. But I don’t think that monopolization 

cases or cartel cases are going to be affected by this, nor would 

nonconsummated mergers. I did raise a question about nonprofits 

in that regard, but, hopefully, this bill would be interpreted so as 

not to create a problem that way. 
64 

And it is intended to be narrow. I think it largely achieves that 

goal. But it is not bad in the sense that this bill will change areas 

outside of mergers. 

Ms. DELBENE. Thank you. 

And I yield back my time, or I am out of time. Thanks. 

Mr. MARINO. Thank you, Ms. DelBene. 

Seeing no other Members to ask questions, and I am told that 

we are going to be voting within the next 10 or 15 minutes, this 

concludes today’s hearing. 

I want to thank the witnesses for attending. It was very insightful and pleasant to hear a discussion from four lawyers who are 

very, very well-qualified and just brilliant in their field. So I want 

to thank you all for being here. 

Without objection, all Members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

materials for the record. 

I want to thank the people in the gallery for being here, and this 

hearing is adjourned. 

[Whereupon, at 3:24 p.m., the hearing was adjourned.] 
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