Khan: Merger Fees, Schedule Not Keeping Pace With Filings

Antitrust filing fees should be increased and enforcer deadlines extended to reflect modern markets, FTC Chair Lina Khan said Friday. Congress’ assumptions when the Hart-Scott-Rodino Act passed in 1976 are now severely outdated, considering the recent surge in merger filings, she said during the American Bar Association’s antitrust law spring meeting in Washington.

The HSR Act’s 30-day timelines aren’t long enough for staff to “thoroughly investigate” deals, Khan said: That timeline reflects Congress’ assumption that enforcers would handle around 150 transactions annually, based on House reports from that time. Now the FTC routinely receives about 150 filings every two weeks, she said: The investigatory process has become “much more document-heavy, onerous and complex.” HSR fees should increase as volume increases, Khan said: “The absence of that was extremely acute for us over the last year.” The agency is “taking a very close look at the entire merger investigation process,” she said.

The FTC’s review includes assessing whether there are ways “to collect on the front end information that is more probative of whether the parties are proposing an unlawful deal,” Khan said. It could lead to more timely and efficient investigations, she said. Khan told an enforcers’ summit earlier in the week it’s not the FTC’s job to remedy illegal transactions if parties propose “facially anticompetitive” deals (see 2204040064).

“Our goal is cracking down on illegal activity in the marketplace, including illegal deals,” Khan said Friday. "Proposing facially unlawful deals has become normalized. It’s a serious problem for enforcers.”

DOJ isn’t afraid to litigate or take on big cases and big companies, said Antitrust Division Chief Jonathan Kanter. He and Khan spoke virtually. Kanter is recovering from a positive COVID-19 case, and Khan is isolating due to exposure while traveling with Kanter.

Kanter noted his division’s six ongoing civil litigations against Google, American Airlines, Penguin Random House, U.S. Sugar, UnitedHealth Group and Verzatec. The division has more than 20 cases in active litigation on the criminal side, he added, and his department is “just getting started” on “all fronts.”

Kanter and Khan cited various legislative proposals they said could help enforcers. Kanter noted DOJ’s support for the American Choice and Innovation Online Act (see 2203300062). Digital markets have transformed the economy, and the bill would clarify the illegality of exclusionary discrimination by dominant digital platforms, he said.

Khan said other areas of opportunity include restoring authority under FTC Act Section 13(b) (see 2106210054) and protections for antitrust whistleblowers. The loss of Section 13(b) had “serious ramifications,” including billions in relief the FTC could have secured, she said: “It’s incredibly important we get it fixed.”

The FTC is thinking about “opportunities for expanding” antitrust whistleblower protections, Khan said. Antitrust whistleblowers aren’t fully protected now, and it could be crucial in a Sherman Act Section 2 context, where dominant companies can “strike fear” among business partners and employees, she said.

EU Commissioner for Competition Margrethe Vestager said she looks forward to full compliance with the EU’s Digital Markets Act by early 2024 (see 2203250001). Tech industry opponents have said the EU is singling out American companies. Vestager said it will likely apply to companies in the U.S., EU and China. “We have open doors,” she said. “Come and talk to us about what you think, how you would live up to this. Compliance should be in place by early 2024.”

More than 50 state attorneys general support the State Antitrust Enforcement Venue Act (see 2202090066), noted Wisconsin Assistant Attorney General Gwendolyn Cooley. House Antitrust Subcommittee Chairman David Cicilline, D-R.I., and ranking member Ken Buck, R-Colo., told us recently they anticipate the bill could pass through a suspension vote. It would allow AGs to choose their venues for filing antitrust cases. Cooley said it would put AGs on equal footing with federal counterparts, prevent delays and reduce litigation costs. She noted Khan’s endorsement of the legislation. Many states are examining labor impacts of deals and job losses, whether they're considered an efficiency or a harm, said Cooley. Expect comments from some states on this topic in the FTC’s merger guideline review with DOJ, she said.