Big companies aiming to merge would have to pay more in fees when filing for antitrust review under legislation that Sen. Amy Klobuchar (D-Minn.) plans to introduce in the coming weeks.
“In an era of megadeals that reach tens or even hundreds of billions of dollars, we need a new category of fees that reflects the complexities of mega-mergers and their serious impact on consumers,” Klobuchar said March 13 in a speech at the Center for American Progress.
The proposed new filing fee is part of a package of bills that Klobuchar says will help antitrust officials enforce competition laws. The other two bills would track the effectiveness of merger settlements and analyze how investment ownership affects competition.
Klobuchar’s views on antitrust enforcement are important because she is the ranking Democrat on the Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights. Her views will guide lawmakers, particularly Democrats, as the committee determines how it investigates big mergers or other potential antitrust violations.
Higher Fees for Mega-deals
Klobuchar is proposing higher fees for bigger deals. For example, she said, Monsanto Co. shouldn’t pay the same fee for its $66 billion bid for Bayer AG than a small business would pay for review of a smaller deal.
Fees currently range from $45,000 for a deal less than $161.5 million to $280,000 for a merger valued at $807.5 million or more. Deals less than $80.8 million are not required to be reported to antitrust regulators.
“Parties involved in large deals are simply not paying their fair share,” Klobuchar said.
A separate bill Klobuchar plans to introduce would gather information about how investment ownership affects competition. Cross-ownership can hurt consumers, she said, noting the largest shareholders of Apple Inc. and Microsoft Corp. are investment management firms BlackRock and Vanguard.
“Congress needs this information to understand whether there is a problem and when investment fund ownership is anti-competitive or benign,” she said.
Criticism for the FTC
Klobuchar said she is sponsoring the legislation in part because she has heard from companies, several of them content providers, that some conditions placed on mergers are not being implemented. Both the Justice Department and the Federal Trade Commission can add conditions to proposed big mergers to ensure fair competition.
A recent example of a merger settlement involving a content provider was when the DOJ imposed several conditions on Comcast Corp.’s purchase of NBC Universal. The settlement required the parties to agree to license programming to online competitors, among other conditions.
“That’s a big concern,” she said, of companies not following through on agreed-upon conditions. “The FTC disagrees, and I’m just looking at what I see and I think that’s a problem. And if it’s not a problem, great. But you’re going to see the proposal I have in a little bit to be able to create some type of checks and balances on the promises that are made at mergers.”
The FTC says most of its merger remedies have worked. An agency study released in January examined merger remedies between 2006 and 2012 to determine whether the settlements successfully preserved competition in the relevant markets. The sale of packages of assets were successful most of the time, but at a lower rate than the divestiture of ongoing businesses, according to the report.
Klobuchar said the FTC’s merger retrospective study is not enough because it only covers FTC settlements and it was the first analysis since 1999. “We have to do better,” she said.
She said the bills will be introduced “in the coming weeks and months.”