The Federal Trade Commission announced Oct. 25 it is restoring its practice of requiring companies that previously pursued an anticompetitive merger to get prior approval for future transactions.
Six things to know:
1. The FTC will now require companies to get prior approval from the agency for any transaction “affecting each relevant market for which a violation was alleged” for at least 10 years.
2. The FTC said in some situations it may seek prior approval provisions that cover broader geographic markets beyond just the relevant markets affected by the merger. The agency will consider several factors to make the determination, including the level of market concentration, the degree to which the transaction increases concentration and evidence of anticompetitive market dynamics.
3. The FTC is less likely to pursue a prior approval provision against merging companies that abandon their transaction, the commission said.
4. The FTC is reinstating the prior approval practice after the commission voted in July to repeal a 1995 policy statement that prevented the agency from imposing these merger restrictions.
5. The agency said it has already implemented the policy by imposing strict limits on future acquisitions by Denver-based DaVita after the company’s acquisition of University of Utah Health’s dialysis clinics.
6. “The FTC should not have to waste valuable time and resources investigating clearly anticompetitive deals that should have died in the boardroom,” Holly Vedova, director of the agency’s bureau of competition, said in a news release. “Restoring the long-standing prior approval policy forces acquisitive firms to think twice before going on a buying binge because the FTC can simply say no.”