The new omnibus resolutions2 come about a year after the FTC announced two lists of mandatory process resolutions in July 2021 and September 2021. The first set of these 2021 resolutions3 Mandatory process allowed in investigations of any proposed merger, acquisition or transaction subject to federal pre-merger notification requirements. It also authorized mandatory procedure in investigations “into key law enforcement priorities for the next decade”, including tech companies and digital platforms; and healthcare businesses such as pharmaceutical companies, pharmacy benefit managers, and hospitals.4 The second set of resolutions – announced in September 2021 – authorized a mandatory process for investigations in eight key enforcement areas, including repair restrictions; misuse of intellectual property; nested directions and common ownership; and monopolistic practices.5

August 2022 Mandatory Process Resolutions

An FTC press release announcing the new omnibus resolutions says eliminating the need for FTC staff to seek binding proceedings through a Commission-wide vote “removes an unnecessary hurdle and time-consuming for further investigation by staff”. Democratic Commissioner Alvaro Bedoya, in a joint statement by Chairwoman Lina Khan and Commissioner Rebecca Kelly Slaughter, explains that while the FTC’s Consumer Protection Bureau has historically employed the use of omnibus resolutions more often than the Bureau of Competition, the new resolutions demonstrate the agency’s intention “to increase the use of this tool within the Competition Bureau to improve the Commission’s ability to quickly investigate emerging threats of anti-competitive behavior in our economy”.6 The vote to approve the resolutions was 3 to 2, with Republican Commissioners Christine Wilson and Noah Phillips issuing a separate dissenting statement calling the resolutions “overshoot” that opens the door to politically motivated decision-making by the agency.seven

Potentially collusive and coordinated conduct

The omnibus resolution ordering the use of a compulsory procedure in investigations into collusive practices8 states that such collusion or coordination may be achieved through the parties’ private communications, public statements, information sharing or other actions. In its press release, the FTC cites “growing concern that the recent inflationary increase in prices may give companies cover to collude against the public interest” as the reason the agency is accelerating its investigation process into these questions. In the majority statement, Commissioner Bedoya describes collusive or coordinated conduct as involving “competitors working together against the interests of consumers or workers rather than competing against each other” and identifies alleged examples of collusion in industries related to mobile phone networks, non-alcoholic beverages and meat. packaging. Commissioner Bedoya argues that “this type of harm to competition warrants prompt and thorough investigation by Competition Bureau staff and vigorous enforcement action by the Commission.”

Mergers, Acquisitions and Proposed Transactions

The Majority Says the Resolution Governing Proposed Mergers, Acquisitions and Transactions9 “will enable prompt investigations of all mergers, including those that fall below the value thresholds that require reporting to antitrust agencies under the Hart-Scott-Rodino Act (HSR Act).” This extends to the July 2021 omnibus resolution which ordered a mandatory process to investigate any proposed merger, acquisition or transaction subject to HSR reporting requirements. To justify this expansion, Commissioner Bedoya cites the Commission’s study 6(b) on declared non-HSR transactions,ten arguing that the expanded resolution will allow the FTC to “quickly investigate even deals that would otherwise fly under our radar.” Commissioner Bedoya also says the resolution seeks to address “hundreds of acquisitions that have not been reported to the FTC or DOJ,” warning that “[f]businesses can . . . deliberately structure their transactions to circumvent HSR reporting thresholds; [and] this use of “avoidance devices” actively subverts the work of agencies.

Dissenting Statement by Republican Commissioners

Republican Commissioners Christine Wilson and Noah Phillips released a joint dissenting statement calling the new omnibus resolutions a “misguided revision of the Commission’s longstanding and well-functioning (and perfectly fast) procedures that promote transparency, oversight and accountability.” “. The dissent argues that – in combination with the July 2021 and September 2021 resolutions – the new omnibus resolutions “eliminate the only Commission’s level of oversight regarding the use of a mandatory procedure in the vast majority of the agency’s competition-related investigations. Rejecting the majority’s focus on the need for faster investigations, the dissent says “the Commission has always been perfectly able and willing to launch investigations in a timely manner on a case-by-case basis, imposing little additional cost real”.

The Republican commissioners call the majority’s assertion that the omnibus merger resolution “will put more deals on [the FTC’s] dishonest radar,” noting that the Commission routinely authorized investigations into unreportable transactions and sometimes sought remedies. With respect to the non-public collusion investigations resolution, the dissent says that while the FTC should devote resources to rooting out illegal collusion in the marketplace, the new resolution is too broad and is applies to conduct that is lawful under well-considered case law, writing: “[t]The new mandatory resolution procedure goes beyond the common sense limits of the law by allowing investigations to examine not only collusion, but also companies that “participate in”. . . coordination in any way with any other market participant. The Republican Commissioners argue that the resolution suggests that the FTC may use Section 5 of the FTC Act to prosecute conduct that courts have consistently found does not violate antitrust laws, and although “there may have circumstances in which tacit coordination investigations are appropriate. . . such investigations should be authorized on the basis of a case-by-case examination of the facts rather than under an omnibus resolution.

Look forward

The new omnibus resolutions are another step in expanding the Competition Bureau’s investigative power. Alongside the series of resolutions passed by the agency in 2021, the new resolutions allow the agency to circumvent the procedural hurdle of a Commission-wide vote and authorize a mandatory procedure in investigations in a wide range of application areas. All merger activity, whether or not reportable to HSR, can now trigger requests for documents and testimony at the discretion of any commissioner. The agency is also now able to expedite investigations into a wide range of behavior deemed by a single commissioner to facilitate “collusion or coordination in any way with any other market participant”. Accordingly, individuals and businesses should be aware that the FTC’s use of investigative tools such as issuing requests for data, documents, and testimony via Civil Inquiry Requests (CIDs) or Subpoenas are likely to become more common and widespread, especially in industries that are the focus of current FTC leadership, such as technology and life sciences.

References

1 The FTC also announced a resolution relating to investigations into unfair and deceptive practices in the rental car industry.

2 Federal Trade Commission press release, “Federal Trade Commission Authorizes Three New Compulsory Process Resolutions for Investigations” (August 26, 2022) available here.

3 Federal Trade Commission press release, “FTC Authorizes Investigations into Key Enforcement Priorities” (July 1, 2021) available here.

4 The other “priority targets” that were at the center of the July 2021 resolutions were repeat offenders; harms against workers and small businesses, and harms related to the COVID-19 pandemic.

5 Federal Trade Commission press release, “FTC Streamlines Consumer Protection and Competitive Investigations in Eight Key Enforcement Areas to Enable Higher Caseload” (September 14, 2021) available here. Other areas of application governed by the resolutions include acts or practices affecting members of the United States armed forces and veterans; acts or practices affecting children; bias in algorithms and biometrics; and deceptive and manipulative behavior on the Internet.

6 Federal Trade Commission, “Statement by Commissioner Alvaro M. Bedoya, joined by Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter regarding Omnibus Resolutions Approved by the Federal Trade Commission (August 17, 2022) available here.

7 Federal Trade Commission, “Dissenting Statement of Commissioners Noah Joshua Phillips and Christine S. Wilson Concerning the Issuance of Two Omnibus Compulsory Process Resolutions” (July 1, 2022) available here.

8 Federal Trade Commission, “Resolution Directing Use of Compulsory Process in Nonpublic Investigations of Collusive Practices” available here.

9 Federal Trade Commission, “Resolution Directing Use of Compulsory Process in Nonpublic Investigations of Proposed Mergers, Acquisitions, and Transactions” available here.

10 Federal Trade Commission, “Non-HSR Reported Acquisitions by Select Technology Platforms, 2010-2019: An FTC Study (September 2021) available here.