FTC to Seek Enforcement Against Debt Retirement Use to Avoid Merger Review

The FTC Competition Bureau will begin recommending “enforcement action” Sept. 27 against companies that “fail to file” proposed transactions with the commission and DOJ “when retirement of debt is part of the consideration for the deal,” acting bureau Director Holly Vedova said in a Thursday blog post. Competition “is concerned” informal agency staff interpretations provided to companies about whether specific types of deals require going through the review process “may not reflect modern market realities or the policy position of the Commission,” Vedova said. “We are currently in the process of reviewing the voluminous log of informal interpretations to determine the best path forward,” but “previous informal interpretations” that “gave the impression that companies could avoid filing by paying off a target company’s debt, instead of paying the company with cash … missed the mark.” Some “merging parties have responded by structuring deals in ways that they believe fall outside of the filing requirements,” she said.