Letter — House Committee on Small Business to FTC and DOJ re Merger Guidelines (April 16, 2024)

Summary

A letter dated April 16, 2024, from the House Committee on Small Business to Chair Lina M. Khan of the Federal Trade Commission (FTC) and Jonathan Kanter, Assistant Attorney General of the Antitrust Division of the Department of Justice (DOJ). The letter inquires about the Final Merger Guidelines jointly released by the FTC and DOJ, and states the Committee's view that the FTC and DOJ failed to properly consider the impact of the Guidelines on small businesses. It requests, as soon as possible but no later than April 30, 2024, documents sufficient to show how small business interests were considered in the drafting process by both agencies. The signature block names Roger Williams, Chairman.

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Full text

                                               April 16, 2024

The Honorable Lina M. Khan                                  Mr. Jonathan Kanter
Chair                                                       Assistant Attorney General
Federal Trade Commission                                    Antitrust Division
600 Pennsylvania Ave. NW                                    Department of Justice
Washington, DC 20580                                        950 Pennsylvania Ave. NW
                                                            Washington, DC 20530

Dear Chair Khan and Mr. Kanter,

        The House Committee on Small Business (Committee) writes to inquire about the
Federal Trade Commission’s (FTC) and the Department of Justice’s Antitrust Division’s (DOJ)
jointly released Final Merger Guidelines (Guidelines) that significantly expand the amount and
type of transactions subject to administrative antitrust investigation and challenge.1 These new
guidelines will have a significant impact on small businesses—nearly half of which look to
mergers and acquisitions (M&A) to grow—but it seems the FTC and DOJ failed to properly
consider the impact the new Guidelines will have on small businesses. This comes at a time
when small businesses are struggling to access capital across the board, through traditional
financing methods as well as alternative capital access options.

        Congress has charged the FTC and DOJ with administering antitrust statutes to promote
open and fair competition, including by preventing M&A that would violate these laws.2
However, the revised set of Guidelines is significantly more hostile toward mergers than the set
they replace. The Guidelines include several presumptions that would automatically designate
some proposed M&A activity as harmful to competition and would trigger frequent extended
review of transactions. By the FTC’s own estimate, these Guidelines could lengthen the process
for merger filing by nearly 300 percent.3 By increasing uncertainty and the risk of time
consuming, expensive, and burdensome investigations, the new Guidelines threaten to deter
M&A transactions before they even get off the ground.4 The FTJ and DOJ present these
Guidelines as providing transparency and reflecting a modern market reality, but it is clear they
further an aggressive enforcement agenda that will deter dealmaking.5


1
  Merger Guidelines, U.S. DEP’T. OF JUSTICE AND THE FED. TRADE COMM’N (Dec. 18, 2023).
2
  Id.
3
  Private Investment Works, FTC and DOJ’s Proposed Merger Guidelines Create Unnecessary Red Tape, Will
Harm Small Businesses, AM. INV. COUNCIL (Aug. 1, 2023).
4
  Steve Albertson, et. al, FTC and DOJ Publish Final Revised Merger Guidelines, Driving Increased Uncertainty
for M&A Activity, FENWICK (Dec. 21, 2023).
5
  New Year, New Merger Guidelines: What Dealmakers Need to Know, COOLEY (Jan. 10, 2024).
The Honorable Lina M. Khan
Mr. Jonathan Kanter
April 16, 2024
Page 2 of 2

        Nearly half of small business owners look to leverage M&A to grow, as merging with
larger companies allow small businesses to connect with the capital, resources, and talent they
need to scale.6 Acquisition is a major avenue for entrepreneurs and investors to achieve returns
on investment.7 In 2020, nearly 90 percent of venture-backed startups exited their venture-
funding through an acquisition.8 The proposed Guidelines hindering these options is a looming
threat that this exit strategy may no longer be available and will limit access to venture and other
capital, thereby limiting innovation and growth.9

        The Biden Administration has already implemented an unprecedented 288 million
paperwork hours with its regulatory activity and these new guidelines only add to that burden.10
It is important for agencies to examine small businesses interests, which make up 99.9 percent of
all businesses in the United States, when passing any new rule or set of guidelines. America’s
small businesses deserve to have their voices heard and considered. We therefore request the
following information as soon as possible but no later than April 30, 2024:

      1. Documents sufficient to show how small business interests were considered in the
         drafting process by both the FTC and the DOJ.

       To schedule the delivery of your response or ask any related follow-up questions, please
contact the Committee on Small Business Majority Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.

                                            In God We Trust,



                                    _________________________
                                          Roger Williams
                                             Chairman
                                    Committee on Small Business

cc:      The Honorable Nydia M. Velazquez, Ranking Member
         Committee on Small Business


6
  FTC Chair Lina Khan: Startup Spoiler, SMALL BUS. & ENTREPRENEURSHIP COUNCIL (Dec. 1, 2022); FTC-DOJ
Proposed Merger Guidelines Threaten U.S. Economic Leadership and Startups, SMALL BUS. & ENTREPRENEURSHIP
COUNCIL (Jul. 19, 2023).
7
  The FTC’s Bizarre Attempt to Rationalize Regulatory Overreach, SMALL BUSINESS & ENTREPRENEURSHIP
COUNCIL (Nov. 18, 2022).
8
  Collateral Damage in Khan”s FTC War on Big Business: Entrepreneurship, Innovation, Consumers, SMALL BUS.
& ENTREPRENEURSHIP COUNCIL (Dec. 16, 2022).
9
  Id.
10
   Dan Goldbeck, Week in Regulation: EPA Starts Off March in a Major Way, AM. ACTION FORUM (Mar. 11, 2024).


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