On November 3, 2023, FTC Chair Lina Khan sent a letter addressed to Representative Thomas P. Tiffany describing the FTC’s merger enforcement program during her tenure at the agency. The letter was a response to an inquiry from seven members of congress for information about the costs associated with certain litigated merger challenges brought by the FTC. Chair Khan’s letter included an appendix that listed all of the merger enforcement actions the FTC had initiated during her tenure. The data in that appendix corroborate the key finding from an article I authored for Law360 in October 2023: merger enforcement actions during the Biden Administration are at their lowest level in decades.
The Chair’s letter is also noteworthy because it seems to acknowledge the practical and substantive benefits of consent decrees, which may suggest a softening of the FTC’s views on settlements.
The Data
The list of merger enforcement actions in the appendix to Chair Khan’s letter is consistent with the data from my Law360 article, and includes seven transactions that the FTC—for the first time—publicly states were abandoned between June 2021 and October 2023 in the face of competition concerns raised by the agency. After accounting for those newly disclosed abandonments, the data continue to show that the number of merger enforcement actions brought by the federal antitrust agencies during the Biden Administration is at a 20-year low.
The chart below contains data from the last 20 fiscal years on the number of merger enforcement actions brought by the FTC and DOJ (including the most recent data published in the appendix accompanying Chair Khan’s letter to Rep. Tiffany). The term “merger enforcement actions” includes litigated merger challenges, pre-litigation consent decrees, and situations where the merging parties abandoned or restructured their transactions in the face of antitrust concerns raised by the agencies. This is consistent with how the FTC and DOJ define “merger enforcement actions” in their Annual Reports to Congress Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The chart also includes a line showing the agencies’ merger enforcement rate, which is the calculated as the number of merger enforcement actions divided by the total number of transactions reported to the agencies under the HSR Act.
As shown above, the agencies challenged just 17 transactions in the 12-month period ending on September 30, 2023, which is the lowest number of federal merger enforcement actions in the last 20 years. The next-lowest was in fiscal year 2005, when the Bush Administration challenged 18 transactions.
In addition, the enforcement rate in each of the first three fiscal years of the Biden Administration was lower than the enforcement rate in any other year in the dataset. This means that each year the current agency leadership has been in office, the FTC and DOJ have challenged a smaller percentage of transactions reported to the agencies than the agencies challenged in any prior year since 2004.
The data for the FTC alone—shown in the chart below—paints a similar picture.
The chart above shows that FTC challenged just 15 transactions in fiscal year 2023, which is the lowest number of merger enforcement actions brought by the agency since fiscal year 2005, when the FTC under the Bush Administration challenged 14 transactions. In terms of the enforcement rate, in each of the first three years of the Biden Administration, the FTC challenged fewer mergers as a percentage of reported transactions than it had in any prior year in the dataset.
An Openness to Remedies? Maybe.
It is also worth highlighting that Chair Khan’s letter to Rep. Tiffany paints the FTC’s merger-related consent decrees in a positive light:
[A]bandoned mergers and settled cases save millions in tax dollars that would otherwise be spent achieving the same outcome. From the Commission’s perspective, those saved dollars—and years—can be deployed to other competition enforcement matters, including investigating other potentially problematic mergers. We must marshal our scarce resources to their best use in order to be good stewards of the money we are given by Congress to safeguard competition and prevent further consolidation. Just as important, an abandoned merger or settled deal protects those who would have otherwise suffered the harmful consequences of an illegal merger.
The acknowledgement that “settled cases” and “settled deals” (i.e., transactions that are permitted to close subject to a remedy) can benefit customers and save agency resources may reflect a slow shift in posture toward consent agreements.
Early in their tenure, the leadership of the FTC and DOJ under the Biden Administration expressed significant and notable skepticism regarding the ability of consent decrees to resolve competitive concerns with allegedly problematic transactions. For example, Axios quoted Chair Khan as saying, “We’re going to be focusing our resources on litigating, rather than on settling.” AAG Kanter has taken a similar position, noting that the Antitrust Division will be “very skeptical” of using divestitures and consent decrees as a way to remedy anticompetitive mergers. “We’re not saying we’re never going to enter into those arrangements, but what we are saying is that we’re coming to it with a skeptical eye. In most instances, the real remedy is to just block the merger entirely and that’s our starting point.”
However, since August 2023, the FTC and DOJ have withdrawn three merger challenges from litigation and instead reached consent agreements.[1] One of those settlements involved a purely behavioral remedy, which current agency leadership has claimed are particularly ineffective.[2] Those recent consent agreements—along with the recognition by Chair Khan that settlements can save the agency resources while protecting competition—could signal that the FTC may consider using consents more frequently.
However, it remains the case that the FTC—and particularly DOJ—likely will continue to view remedy proposals with a high degree of skepticism. This is particularly true in light of the letter that Senator Elizabeth Warren sent to Chair Khan and her fellow commissioners on November 9 “urg[ing] the FTC to reject the use of remedies – both behavioral and structural – in merger review . . . .”
Companies considering complex transactions should involve antitrust counsel early in the process. You can reach me at rquillian@cov.com or 202-662-5329.
[1] The three cases that the agencies withdrew from litigation and subsequently settled were FTC v. Amgen/Horizon, FTC v. Intercontinental Exchange/Black Knight, and U.S. v. ASSA ABLOY/Spectrum Brands. The consent agreement in DOJ’s challenge to ASSA ABLOY’s proposed acquisition of Spectrum Brands remains the only settlement the Antitrust Division has entered since the Senate confirmed AAG Kanter in November 2021.
[2] For example, the former Director of the Bureau of Competition under Chair Khan previously said, “Looking at [behavioral remedies] going forward, we don’t expect to be drawn into complex negotiations over remedies. Our staff’s time is valuable and much better spent on litigation.”