The new omnibus resolutions2 come approximately one year after the FTC announced two slates of compulsory process resolutions in July 2021 and September 2021. The first set of these 2021 resolutions3 authorized compulsory process in investigations of any proposed merger, acquisition, or transaction subject to federal premerger notification requirements. It also authorized compulsory process in investigations “into key law enforcement priorities for the next decade,” including technology 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 compulsory process for investigations in eight key enforcement areas including repair restrictions; abuse of intellectual property; interlocking directorates and common ownership; and monopolistic practices.5
August 2022 Compulsory Process Resolutions
An FTC press release announcing the new omnibus resolutions says that eliminating the need for FTC staff to seek compulsory process through a Commission-wide vote “removes an unnecessary and time-consuming barrier to staff’s pursuit of an investigation.” Democratic Commissioner Alvaro Bedoya, in a statement joined by Chair Lina Khan and Commissioner Rebecca Kelly Slaughter, explains that while the FTC Bureau of Consumer Protection 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 in the Bureau of Competition to enhance the Commission’s ability to quickly investigate emerging threats of anticompetitive conduct in our economy."6 The vote to approve the resolutions was 3-2, with Republican Commissioners Christine Wilson and Noah Phillips issuing a separate dissenting statement calling the resolutions an “overreach” that opens the door to politically-motivated decision making by the agency.7
Potentially Collusive and Coordinated Conduct
The omnibus resolution directing the use of compulsory process in investigations of collusive practices8 states that such collusion or coordination can be carried out through parties’ private communications, public statements, information sharing, or other actions. In its press release, the FTC cites the “rising concern that the recent inflationary increase in prices may be giving companies cover to collude against the public interest” as a reason for the agency to fast-track its investigatory process in these matters. In the majority’s statement, Commissioner Bedoya describes collusive or coordinated conduct as involving “competitors working together against consumer or worker interests rather than competing against one another,” and identifies purported examples of collusion in industries related to mobile phone networks, soft drinks, and meat packing. Commissioner Bedoya argues that “this kind of competition harm warrants fast and thorough investigation by Bureau of Competition staff and strong enforcement action by the Commission.”
Proposed Mergers, Acquisitions and Transactions
The majority asserts that the resolution governing proposed mergers, acquisitions and transactions9 “will allow for quick investigations of all mergers, including those that fall below the value thresholds that require reporting to the antitrust agencies under the Hart-Scott-Rodino Act (HSR Act).” This expands upon the July 2021 omnibus resolution that directed compulsory process to investigate any proposed merger, acquisition, or transaction subject to HSR reporting requirements. To justify this expansion, Commissioner Bedoya cites to the Commission’s 6(b) study on non-HSR reported transactions,10 arguing that the broadened resolution will allow the FTC to “expeditiously investigate even those deals that would otherwise fly under our radar.” Commissioner Bedoya also says that the resolution is intended to address the “hundreds of acquisitions that were not reported to the FTC or DOJ,” warning that “[f]irms can . . . deliberately structure their deals to sidestep the HSR reporting thresholds; [and] this use of ‘avoidance devices’ actively subverts the agencies’ work.”
Republican Commissioners’ Dissenting Statement
Republican Commissioners Christine Wilson and Noah Phillips issued a joint dissenting statement calling the new omnibus resolutions an “ill-advised overhaul of longstanding and well-functioning (and perfectly expeditious) Commission procedures that promoted 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 layer of Commission oversight concerning the use of compulsory process in the vast majority of the agency’s competition-related investigations.” Rejecting the majority’s emphasis on the need for more expeditious investigations, the dissent asserts that “the Commission has always been perfectly able and willing to initiate timely investigations on a case-by-case basis, imposing little real additional cost.”
The Republican Commissioners call the majority’s contention that the merger omnibus resolution will “put more deals on [the FTC’s] radar” disingenuous, noting that the Commission has routinely authorized investigations of non-reportable deals and sometimes pursued remedies. With respect to the resolution pertaining to non-public investigations of collusive practices, the dissent says that, while the FTC should dedicate resources to rooting out unlawful collusion in the marketplace, the new resolution is overbroad and applies to conduct that is legal under well-established case law, writing: “[t]he new compulsory process resolution exceeds the law’s common-sense limits by authorizing investigations to examine not just collusion, but firms that are ‘participating 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 pursue conduct that courts have routinely concluded does not violate the antitrust laws, and while “there may be circumstances in which investigations of tacit coordination are appropriate . . . those investigations should be authorized on a case-by-case examination of the facts rather than under an omnibus resolution.”
Looking Ahead
The new omnibus resolutions are yet another step in the expansion of the Bureau of Competition’s investigatory authority. In conjunction with the spate of resolutions adopted by the agency in 2021, the new resolutions allow the agency to bypass the procedural hurdle of a Commission-wide vote and authorize compulsory process in investigations across a broad array of enforcement areas. All merger activity—whether HSR-reportable or not—can now trigger demands for documents and testimony at the discretion of any individual Commissioner. The agency is also now able to expedite investigations into a broad range of conduct deemed by any single Commissioner to facilitate “collusion or coordination in any way with any other market participant.” As a result, individuals and businesses should be aware that the FTC’s use of investigatory tools such as the issuance of demands for data, documents, and testimony via civil investigative demands (CIDs) or subpoenas are likely to become more common and widespread, particularly in sectors that are the focus of current FTC leadership such as technology and life sciences.
Authored by Logan Breed, Chuck Loughlin, and Jill Ottenberg.
References
1 FTC also announced a resolution related to investigations of unfair and deceptive practices in the car rental industry.
2 Federal Trade Commission press release, “Federal Trade Commission Authorizes Three New Compulsory Process Resolutions for Investigations” (26 August 2022) available here.
3 Federal Trade Commission press release, “FTC Authorizes Investigations into Key Enforcement Priorities” (1 July 2021) available here.
4 Other “priority targets” that were the focus 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” (14 September 2021) available here. The other areas of enforcement governed by the resolutions include acts or practices affecting U.S. armed forces service members and veterans; acts or practices affecting children; bias in algorithms and biometrics; and deceptive and manipulative conduct on the internet.
6 Federal Trade Commission, “Statement of Commissioner Alvaro M. Bedoya, Joined by Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter Regarding Omnibus Resolutions Approved by the Federal Trade Commission (17 August 2022) available here.
7 Federal Trade Commission, “Dissenting Statement of Commissioners Noah Joshua Phillips and Christine S. Wilson Regarding the Issuance of Two Omnibus Compulsory Process Resolutions (1 July 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.
