A huge increase in the number of mergers coming before the U.S. Federal Trade Commission for antitrust reviews is limiting its ability to investigate deals in a timely fashion, the FTC said on Tuesday.
The agency, which works with the Justice Department to enforce antitrust law, said it got 343 deal notifications in July alone, up from 112 last July. It said in a statement that the influx “is straining the agency’s capacity to rigorously investigate deals ahead of the statutory deadlines.”
The agency said it was sending letters to some companies planning transactions that although its waiting period would soon expire, the FTC probe was not complete.
“Please be advised that if the parties consummate this transaction before the Commission has completed its investigation, they would do so at their own risk,” it said.
Commissioner Noah Phillips, a Republican who has been critical of the new leadership at the FTC, said his understanding was that similar letters were sent previously, primarily to companies contemplating a transaction that the agency thought might be illegal.
“The government shouldn’t threaten litigation without a belief the law has been or will be broken. The issue that that raises for me is that if the letters are not being sent where we have some reason to conclude that the transaction is illegal, I am concerned that they are intended to chill legal M&A across the board,” he said.
In February, the FTC and Justice Department’s Antitrust Division temporarily suspended the practice of granting early terminations for the least controversial deals. It did so because of the change in administrations and a jump in the number of merger filings.
Under merger law, transactions over a certain size must be reported to the government, which allows many to go forward quickly under what is called “early termination.” More complicated or more controversial deals trigger a “second request,” or a demand for documents about the proposed transactions.
Source: Reuters.com