Ftc Proposes Rule Change That Would Make It Easier For Firms To Justify Mergers

Federal trade regulators are proposing to make it easier for companies to justify mergers based on cost-savings for consumers.

The recommendation was included in a voluminous report from the Federal Trade Commission that was prepared in response to increased globalization and rapid innovation affecting the marketplace.

Last week, the FTC asked the Justice Department’s Antitrust Division for help examining how such savings should be treated when reviewing proposed mergers for possible antitrust violations.

The two agencies and the courts may consider such merger-related cost savings when reviewing corporate unions, but it remains unclear as to when and how such savings should be weighed, the report said.

Under one possible approach, the likely cost savings of a merger would have to be considered to determine whether the benefit to consumers would outweigh any anti-competitive effects of the transaction.

FTC Chairman Robert Pitofsky said that along with enforcement laws, regulatory agencies should “be alert to the question of whether the laws they are enforcing are up-to-date and continue to make sense.”

In the area of innovation, the report proposes that the FTC continue and, in some cases, expand current activities designed to ensure that consumers benefit from competition by firms racing to develop new products.

The report is the result of two months of public hearings last year on the effects of globalization and innovation and whether FTC consumer protection and antitrust policies should be adjusted to keep pace.