Merger Remedies Proposals to Face ‘Skeptical’ FTC, Official Says

The Federal Trade Commission will be “skeptical” about companies’ business divestiture offers made as a remedy in antitrust regulators’ merger approval, an agency official said.

“We have neither the resources nor the mandate to function as an industrial planner,” FTC Bureau of Competition Director Holly Vedova said Friday at a conference. “Therefore, parties should expect us to be skeptical and risk averse when considering offers to settle in our merger investigations.”

As they undergo merger review, companies often agree to sell off a business unit—typically the units that would overlap after merger closure—to a third-party company in hopes of easing regulators’ competition concerns. Remedies are getting increasingly complex, Vedova said.

The FTC, under Chair Lina Khan, has increasingly resisted classic merger remedies, pointing to high-profile divestiture failures and research showing nearly a third of recent remedies either failed or didn’t restore competition with sufficient speed.

The bureau will not consider risky remedies, where divested business units can’t stand alone or buyer-seller entanglements exist, Vedova said at the GCR Live: Law Leaders Global conference in Miami.

“Our approach today is that the Bureau of Competition will only recommend acceptance of divestitures that allow the buyer to operate the divested business on a standalone basis, quickly, effectively and independently, and with the same incentives and comparable resources as the original owner,” she said.

Agency staff will enforce strict deadlines on parties to submit credible divestiture offers, Vedova said.

“We’re not going to engage in extended negotiations that sometimes drag on for months as parties haggle with us over what is the right package of assets to create a standalone business,” she said.