The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Creating a SMARTER Merger Review Process

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


The ongoing saga of the AT&T/Time Warner merger, and the April 29, 2018 announcement by T-Mobile and Sprint that they would begin merger proceedings underpin the need for a streamlined, consistent merger application process.  Federal regulators must provide companies with procedural certainty and clarity that will benefit not only the companies involved but also consumers.

Currently, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) determine which agency will conduct a federal review of a proposed merger.  Yet, the standards by which the two agencies administer their reviews differ, leading to unequal treatment and unnecessary expenses.  For mergers between telecommunications companies, the Federal Communications Commission (FCC) also has an opportunity to approve a merger proposal, adding an additional layer of review to the process. 

While the FCC currently has a 180-day shot clock mechanism in place for merger adjudication, as indicated by the Sinclair Broadcasting merger, this clock can be paused at the discretion of the commission, adding continued delays to the proceedings.  

On May 15, 2018, Sen. Mike Lee (R-Utah), along with Sens. Charles Grassley (R-Iowa), Orrin Hatch (R-Utah), and Thom Tillis (R-N.C.), introduced S. 2847, the SMARTER Act, which seeks to address issues within the merger review system.  Currently, under the Clayton Antitrust Act of 1914, the FTC is charged with preventing and eliminating unlawful tying contracts, corporate mergers and acquisitions, and interlocking directorates, including the prevention of discriminatory pricing and product promotion.  The SMARTER Act would adjust the FTC’s procedures to require the agency to satisfy DOJ's standards to obtain preliminary injunctions to block a merger, and to litigate the merits of contested merger cases in federal court under the Clayton Act rather than before an administrative law judge.

The bill also establishes a 180-day shot clock to govern FCC review and streamlines the availability of judicial review where a merger application is denied.  Under the SMARTER Act, if the FCC cannot issue a decision within the 180-day timeframe, it can apply for an extension in court, rather than making an internal decision to delay a merger application by “pausing” the shot clock on its own.  Finally, the bill provides for direct appeal of a merger decision to an Article III court, eliminating the time-consuming step of an administrative law judge hearing.

These are commonsense reforms to streamline the way in which merger applications are adjudicated within the federal government, creating a more efficient process, saving taxpayer dollars, and promoting economic growth.

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