FTC Commissioner Thomas Leary Speaks on "The Essential Stability of Merger Policy in the United States"

Speaking today before the Joint U.S./E.U. Conference "Guidelines for Merger Remedies: Prospects and Principles" in Paris, France, Federal Trade Commissioner Thomas B. Leary presented a focus on the consistency of merger policy in the United States over time. While the conventional narrative in the popular press, he said, is that merger policy in the United States has evolved like a pendulum swings - from periods of aggressive enforcement policies to more permissive policies and back - in fact, this popular perception is incorrect; recent history indicates substantial continuity in the enforcement policies and an acceptance of a coherent but evolving legal and economic framework for merger analysis.

Stating that "our trading partners are surely entitled to know whether our ideas about the appropriate [merger policy] path are subject to change without notice whenever a new administration takes over," Leary began his remarks by presenting a historical overview of U.S. antitrust activities from the mid-20th century to the present. Specifically, he focused on merger decisions from the 1970s on, as well as the implementation of the Hart-Scott-Rodino Premerger Notification Act, to illustrate how merger review policies have evolved over time.

He stressed the "persistence of basic themes in merger guidelines" over time, saying that "anyone who looks at the definitive expressions of merger enforcement policy, contained in successive versions of the merger guidelines issued in 1982, 1984, and 1992 (including the 1997 efficiencies revisions), will note remarkable similarities." While some observers might argue that what is in the guidelines and what was actually put into practice by the staffs ... may differ, he said, "variations in application at any particular times ... resulted from evolutionary changes in economic theory and from the gradual accumulation of industry expertise in the agencies." The fact that a relatively insignificant number of mergers have been challenged throughout the two decades [since the guidelines have been in effect] "would indicate that the guidelines do provide accurate guidance to antitrust counselors."

The Commissioner continued by presenting a detailed overview of the merger guidelines and their evolution since their inception, including new views regarding efficiencies and the treatment of "entry" during the merger review process. In summary, he said, "The Guidelines reveal a more complex process that is not only responsive to current economic understanding but also to practical enforcement experience." To support this assertion, he presented statistical evidence obtained between 1981 and 2000 regarding the number of merger enforcement actions brought by successive administrations that shows consistency, rather than inconsistency, as the hallmark of review during that time.

Finally, Leary presented detailed descriptions of several individual merger cases over the past 20 years, including those in the healthcare and defense industries, showing that while reviewing the matters, "the agency decision-makers are, to a great extent, on their own ... it is significant that there is so much unanimity over outcomes and, when there are differences, they are not primarily driven by ideology."

"Merger policies in the 1990s do not represent a counter-reaction to, or a repudiation of, policies in the 1980s," he said. "The fundamental policy shift of the 1980s - namely, the focus on the economic welfare of consumers - remains firmly in place ... There have been evolutionary changes, but they are forward-looking and change was anticipated by those in charge of the antitrust agencies 20 years ago."

Concluding his remarks, the Commissioner said, "The relative stability that we have seen over the last 20 years, in a period of vigorous policy debate, is a good omen for the future." Based on the evidence presented, "it should reassure our trading partners about the essential stability of merger policy in the United States."

Copies of the Commissioner's remarks are available from the FTC's Web's site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC's Bureau of Competition seeks to prevent business practices that restrain competition. The Bureau carries out its mission by investigating alleged law violations and, when appropriate, recommending that the Commission take formal enforcement action. To notify the Bureau concerning particular business practices, call or write the Office of Policy and Evaluation, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, D.C. 20580; Electronic Mail: antitrust@ftc.gov; Telephone: (202) 326-3300. For more information on the laws that the Bureau enforces, the Commission has published "Promoting Competition, Protecting Consumers: A Plain English Guide to Antitrust Laws," which can be accessed at http://www.ftc.gov/bc/compguide/index.htm.