FTC Commissioner Says Virus Is Cutting M&A Review Burden

By Bryan Koenig
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Law360 (April 29, 2020, 9:04 PM EDT) -- Although the COVID-19 pandemic has placed tremendous strain on antitrust enforcers, a decline in corporate transactions has spared agencies by diminishing the number of deals to review, a member of the Federal Trade Commission said in comments made public on Wednesday.

FTC Commissioner Noah J. Phillips said on a videocast, released in lieu of this year's spring meeting of the American Bar Association's antitrust law section, that the pandemic has forced the agency to telework en masse.

But while the pandemic has forced the agency to adapt its operations and has impeded some of its work, such as depositions in active cases that must be done remotely or delayed, Phillips noted that the COVID-19 outbreak and its economic impacts have also spurred a general downward trend in mergers and acquisitions.

"Which means, that with respect to how the agencies are functioning, to some extent, at least in terms of the numbers that we're seeing, what the data show, is that the burden has been lessened because there's less M&A going on," Phillips said.

Phillips praised FTC staffers for their response to the pandemic, noting that the agency and the U.S. Department of Justice were able to resume granting transactions early terminations to the normal 30-day waiting period in late March, having initially suspended early terminations earlier in the month.

Both U.S. antitrust enforcers have scrambled to adapt to a pandemic that has sickened more than 1 million people and killed more than 57,000 people in the U.S., according to the Centers for Disease Control and Prevention count on Wednesday.

The agencies' efforts include facilitating coordination between companies combating the pandemic and shoring up the supply chain, while warning against any anti-competitive effort to take advantage of the situation.

The coronavirus pandemic has also prompted introspection about how mergers are reviewed, including when companies claim the pandemic and its economic impacts require they merge if they don't want to shutter entirely. That scenario has already played out in the U.K., where antitrust enforcers in mid-April provisionally cleared Amazon's planned minority investment in Deliveroo after the British food delivery company said it needs the infusion to survive turmoil in the restaurant industry being caused by the novel coronavirus pandemic.

In the U.S., Phillips said on the videocast that more "failing firm" defenses will likely be made. However, "that's a pretty hard test to meet. The failing firm defense is not something that is easy to prove. And we're always skeptical of claims that folks make," he said.  

The coronavirus' impacts on mergers has not gone unnoticed by lawmakers. Sen. Elizabeth Warren, D-Mass., and Rep. Alexandria Ocasio-Cortez, D-N.Y., announced plans on Tuesday to introduce legislation that would ban most mergers and acquisitions by companies over a certain size while the country recovers from the pandemic.

Phillips, a member of the FTC's Republican majority, has argued against that proposal. He shared a tweet from Harvard professor and former Obama administration chief economic advisor Jason Furman arguing that banning all mergers, without considering their unique circumstances, "makes no sense in the best of times and is particularly misguided when some mergers can save jobs in the midst of an economic crisis."

COVID-19 also has antitrust implications for how enforcers and policymakers handle conduct cases, an important subject for the webcast, which focused on how to think about and assess vertically integrated digital platforms.

Antitrust enforcers at the state and federal level have been probing platforms like Google, Facebook and Amazon, while their peers at the European Union have been more aggressive, hitting Google with billions in fines for conduct that includes allegedly prioritizing its own comparison shopping service.

The pandemic and the importance of tech platforms to responding to the crisis has led to speculation that antitrust enforcement against those companies might ease up. But the head of the European Commission antitrust unit responsible for e-commerce, Thomas Kramler, said on the videocast that, while dealing with the pandemic may force a shift in urgent priorities and delay platform probes, they're not going on the "backburner."

"They will also go on. It will probably take a bit longer as other, more urgent, pressing things are on the agenda now. Especially when it comes to supply constraints," Kramler said. "But I don't think that we'll now turn a blind eye on platforms. To the contrary, I think when things get a bit more back to normal, these investigations will certainly resume."

Phillips expressed a similar sentiment, arguing that anyone targeting antitrust enforcement based on a company's popularity probably shouldn't be an antitrust enforcer.

"Just like the fact that a lot of people might not like a company isn't a good reason to target them before the crisis, the fact that they're behaving well in some other context shouldn't inoculate them from antitrust review," Phillips said. "We're not popularity police. We're supposed to be policing competition."

Phillips also similarly said that crises force shifts in priorities, noting that the DOJ and FTC announced expedited review of requests for agency blessings of proposed coordination when it's aimed at combating the pandemic. However, "I don't see a massive pivot in terms of enforcement," he said.

--Additional reporting by Matthew Perlman and Anne Cullen. Editing by Nicole Bleier.

For a reprint of this article, please contact reprints@law360.com.

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