What They Are Saying: FTC/DOJ Merger Proposals Will Hurt Small Businesses, Raise Prices, Stifle Competition

Bipartisan former administration officials, competition law experts, economists, & academics speak out against new extreme proposals

Recently, the Federal Trade Commission (FTC) and Department of Justice (DOJ) proposed changes that would impact mergers and acquisitions – changes that competition, antitrust, and economics experts consider a departure from established law and fundamental economic principles.  

Rather than supporting competition, these proposed changes will stifle free markets and ultimately harm consumers – while private equity continues to uplift small businesses and encourage market competition. 

In public comment and news media, opposition to new FTC/DOJ merger and acquisition proposals continues to mount – revealing a broad consensus that excessive regulation would harm economic growth, businesses, and consumers. Here’s a closer look at what they’re saying:

Grounded in Flawed Logic, Proposed Merger Guidelines Unfairly Burden Businesses and Will Have Troubling Economic Consequences 

  • “…[T]he new guidelines’ economic costs could be staggering. Consumers would pay higher prices when companies can’t combine to take advantage of large-scale efficiencies. Start-ups would lose a way to gain access to the resources they need to get their innovations to the masses. Smaller rivals would go out of business when they should be able to combine and stay competitive against a dominant competitor…These opportunity costs would deprive consumers of lower prices and new innovations…Since Khan’s FTC isn’t likely to win many cases under the new guidelines, about the only winners from her new guidelines will be lawyers.” – Ryan Young, Senior Economist at Competitive Enterprise Institute and Alex Reinauer, Research Fellow at Competitive Enterprise Institute in National Review
  • “The Khan led FTC has taken myriad actions to attack free markets. The announcement on new guidelines on assessing acquisitions and mergers is yet another example of the FTC treating corporations as if they are criminal enterprises trying to shortchange the American public. The fact is that government does not create wealth. Government is good at taxing, regulating individuals and corporations. Government is bad at running the private sector.” – Jerry Rogers, RealClearPolicy 

Proposed Merger Guidelines Rely on Outdated, Cherry-Picked Case Law and Forego Well-Established Economic Principles 

  • “…[T]he current proposed guidelines elevate the holdings of outdated cases and passé economics to try to rewrite the law…The ideal market for consumers and workers is not a bunch of isolated, small companies that write new contracts every month. While sometimes problematic, mergers can be beneficial to consumers, especially when the merger is between two companies that are not competitors. The merger guidelines need to reflect that.” – Brian Albrecht, Chief Economist at the International Center for Law & Economics, in StarTribune

Proposed Premerger Notification Requirements Wrongly Increase Transaction Costs and Lack Substantive Rationale 

  • “…[T]he new rules demand much more, even from actions that raise no substantive antitrust issues…The new form, if adopted, will require companies to increase the average time for a business to complete the form from 37 to 144 hours…and spend $350 million more for executive labor and attorney’s fees. While there is no doubt that mergers have become more complex, that is likely due to the increased regulations that dissuade new companies from going public, making acquisition the preferable end goal for a new business. Therefore, increasing the costs of mergers as a solution is like a man trying to pay off his gambling debt by taking his salary to Las Vegas.” – Harry Kazenoff, Competitive Enterprise Institute 

The Bottom Line 
Experts agree: proposed merger changes are a concerning departure from fundamental antitrust law and free market principles – threatening economic growth, private sector vitality, and – ultimately – consumer welfare.