House Republicans reject merger moratorium
By: Billy Easley II, Senior Tech Policy Analyst at Americans for Prosperity
Earlier today, House Republicans dropped a letter that offered a sharp rebuke of the fringe position that all mergers should be banned in the midst of the COVID-19 outbreak. A small but vocal group of partisan activists have put their blind belief that all mergers are bad ahead of facts, agency capacity, and the law.
It’s a necessary admonition of a bumper sticker idea that isn’t based on reality.
The proposal had been pushed for weeks by a handful of Democrats in Congress. House Judiciary antitrust subcommittee Chairman David Cicilline and a handful of predictable members and outside groups urged House Speaker Nancy Pelosi to include the ban in the HEROES Act, the COVID-19 relief bill. When that legislation dropped yesterday, there was a noteworthy absence of a merger moratorium.
It’s telling that this far-flung view was left out of the House’s extravagant $3 trillion wish list. It demonstrates that its position held by members on the fringes of the party.
Just last week, Federal Trade Commission Commissioner Noah Phillips pointed out the baseless nature of this proposal in a piece he wrote for Truth on Market:
“As a general matter, decades of research and experience tell us that the vast majority of mergers are either pro-competitive or competitively-neutral. But M&A, even dramatically reduced, also has an important role to play in a moment of economic adjustment. It helps allocate assets in an efficient manner, for example giving those with the wherewithal to operate resources (think companies, or plants) an opportunity that others may be unable to utilize. Consumers benefit if a merger leads to the delivery of products or services that one company could not efficiently provide on its own, and from the innovation and lower prices that better management and integration can provide. Workers benefit, too, as they remain employed by going concerns.”
As Commissioner Phillips noted, while COVID-19 has required the FTC to adjust its work, its work continues. There is also no evidence of a merger “wave” which would justify pausing the agency’s work.
A merger ban was also noticeably absent from the recent antitrust letter signed by 15 Senate Democrats, led by Sen. Klobuchar. From an outside perspective, the move seemed like an effort to put space between themselves and this radical view.
For all of the public attention devoted to neo-Brandeisian (“hipster”) antitrust, it’s simply not catching on. It’s been passed over by Senate Democrats. It’s been passed over by House Democrats. It’s a fringe view.
It was encouraging to see that Ranking Member Jim Jordan and Republicans on the antitrust subcommittee soundly rejected the merger ban and offered a sharp critique of the proposal. The letter included subcommittee members Reps. Ken Buck, James Sensenbrenner, Matt Gaetz, Kelly Armstrong and Greg Steube. Congressman Jordan and his colleagues should be commended for rejecting the idea that government should be picking winners and losers in the marketplace.
They lay out three primary reasons for rejecting the merger ban:
1. Merger and acquisition activity has fallen to its lowest level in years.
2. Antitrust committees like the FTC continue to conduct premerger reviews despite the pandemic.
3. Delaying or banning merger and acquisition activity will stunt economic development and recovery.
The letter also speculates on the motivations behind the merger ban effort:
“These lawmakers misguidedly assail anticipated mergers and acquisitions as ‘predatory’ and ‘unnecessary,’ and are using the crisis as a pretense to rail against firms being free to make decisions they perceive to be in their best interests.”
Their assessment is absolutely correct. The proposal from Cicilline and others isn’t based on salient evidence, it is about scoring points with their base for supposedly standing up to big business. And they are doing so at the expense of American workers and consumers.
Kudos to the Republican members of the Judiciary Committee who have rallied against this proposal. In uncertain times, it’s a comforting reminder that commonsense still prevails at the highest levels of government.
