When federal bureaucracies veer outside their policy lane, claiming a mandate from the American people for audacious new actions, things get weird and broken. A case in point is Assistant Attorney General (AAG) Jonathan Kanter’s speech on September 19 at the Georgetown Antitrust Law Symposium where he claims strong public support for new, highly restrictive merger guidelines.
Are entrepreneurs and other hard-working Americans really upset about business combinations? And if so, is this a bigger worry than inflation, rising interest rates, competition from China, and other economic issues?
AAG Kanter thinks so, though he cites sparse, anecdotal evidence. Even a more thorough review of public comments filed with his own agency should lead AAG Kanter to re-think his position.
In his speech to elite members of the bar at Georgetown, which focused on the Federal Trade Commission (FTC) and U.S. Department of Justice’s proposed merger guidelines, Kanter said, “Citizens are speaking up and we are listening. Our litmus test for success is whether we are serving the needs of the American people. They are now watching too, and they are demanding that we do more and that we do better to protect a competitive economy.”
AAG Kanter spoke hours after the public comment deadline for the proposed merger guidelines docket. He was quite pleased that more than 3,000 comments had been received and that most are supportive of the proposal. Also, he noted that a similar effort 14 years ago received only 44 comments.
That the number of individually filed comments mainly support the proposal is not surprising as progressive activists have long been able to gin up support for letters about such causes. And with America having a population of over 330 million, only one out of every 110,000 Americans directly provided comments.
The guidelines deeply disturb well-respected business organizations that represent broad cross-sections of American industry, including entrepreneurs. That’s because the guidelines are overly broad and hostile and will create much uncertainty about mergers.
And their comments to the public docket clearly and strongly reflect that.
The U.S. Chamber of Commerce, which represents the interests of more than three million businesses of all sizes, sectors, and regions, says in its comments, “If adopted, the Draft Guidelines would reduce innovation, damage the economy, and disadvantage American companies relative to their global competitors.”
The Chamber adds, “By prohibiting or chilling precompetitive mergers, the Draft Guidelines would deny startups and smaller companies the capital and expertise they need to thrive.”
The Business Roundtable says, “The Draft Guidelines are simply misleading as to what facts indicate harm to competition. To the extent that the business community (or agency staff) uses the identified factors to determine the legality of a merger, they will be using vastly over-restrictive or legally irrelevant rules of decision.”
Similarly, the National Venture Capital Association does not pull any punches stating that, “The Draft Merger Guidelines risk destroying the symbiotic relationship between the startup community and more established firms. This will necessarily chill investment in venture capital-backed startups that have been a main driver of innovation in the U.S. economy over the last several decades.”
And there’s more. The Small Business & Entrepreneurship Council’s comments include “The draft merger guidelines are arbitrary, would create uncertainty and hinder positive economic activity that connects entrepreneurs and startups to the resources and capital they need to scale, compete with larger businesses, and bring unique and innovative products and services to the wider marketplace.”
The U.S. Department of Justice and FTC should read, study, and take to heart the well-documented concerns about the draft merger guidelines and withdraw them. It is time for both agencies to listen to America’s business community rather than lecture to it.
