Forbes Opinion – Former FTC Official: FTC & DOJ Must Return to a Balanced, Bipartisan Approach to M&A

Jul 3, 2024 | Blog Post

In a recent Forbes op-ed, former Federal Trade Commission (FTC) general counsel Alden Abbott outlines the lack of evidence behind the FTC and Department of Justice’s (DOJ) recent shift toward a more aggressive approach to challenging mergers and acquisitions (M&A).

Alden Abbott is a Senior Research Fellow at the Mercatus Center at George Mason University and former special counsel in the DOJ’s Antitrust Division.

In his op-ed, Abbott highlights the decades-long consensus that M&A serves as a vital pathway for early-stage companies to be able to advance new breakthroughs to consumers, particularly in the life sciences ecosystem. As he accurately concludes, it is critical that the Agencies bear this in mind and take a balanced and bipartisan approach that supports pro-innovation mergers and the innovations they seek to advance.

Key excerpts from Abbott’s op-ed are included below:

  • “In 2023, the agencies proposed an overhaul of pre-merger notification requirements, embodied in a revised rule that would greatly increase costly reporting burdens on firms proposing mergers for agency antitrust review. Then, last December, the agencies also issued controversial new guidelines that disincentivized mergers…”

Competition Has Not Declined, And Merger Enforcement Has Not Been Lax

Mergers Often Enhance Competition, Innovation, And Economic Efficiency

  • “Prior to this administration, the FTC and DOJ had long recognized on a bipartisan basis the economically beneficial aspects of most mergers. As then-Obama administration Assistant Attorney General for Antitrust Christine Varney stated in 2009, ‘the vast majority of mergers are either procompetitive and enhance consumer welfare or are competitively benign.’”
  • “Furthermore, the DOJ and FTC detailed high-tech mergers’ potential to promote innovation in a 2020 paper presented to the Organisation for Economic Cooperation and Development )…‘[I]n dynamic sectors characterized by high R&D costs, firms with broad scale and scope may have unique incentives and capabilities to invest in innovation. For example, where a firm can exploit synergies across product lines or earn returns on research and development projects across multiple geographies, it may have greater incentives to make investments in such projects than firms with more limited operations.’”
  • A 2021 Congressional Budget Office report on pharmaceutical industry R&D explained that ‘[t]he acquisition of a small company by a larger one can create efficiencies that might increase the combined value of the firms by allowing drug companies of different sizes…to specialize in activities in which they have a comparative advantage.’”
  • “The resulting business uncertainty and likelihood of increased merger-filing costs are likely to disincentivize many welfare-enhancing business transactions. The end result will be fewer economically beneficial mergers and reduced innovation.”

There Is A Simple Policy Solution

  • “The policy solution is simple: The Biden administration, or its successor, merely needs to take stock of the situation and then reinstitute the bipartisan merger policies that worked well in recent administrations.”

To read the full op-ed, click here.