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ANALYSIS: FTC May Be Headed Into Deadlock, Delaying Big Deals

Oct. 7, 2021, 9:00 AM

The Federal Trade Commission may be about to pause, unable to act on antitrust enforcement and policy until President Biden’s nominee can be confirmed and seated.

On Oct. 8, Federal Trade Commissioner Rohit Chopra is stepping down to take up his new position as head of the Consumer Financial Protection Bureau. Because it takes a majority among the Commissioners present to conduct business, and because the remaining commissioners will be split 2-2 between Democrat and Republican appointees, the Commission may find itself sitting on its hands until an equally divided Senate can approve privacy expert Alvaro Bedoya, whom Biden nominated Sept. 20 for Chopra’s seat.

In the past, the Commission has typically managed to continue making decisions and bringing cases while short a member (or several). These aren’t normal times, however. Many actions could be easily conducted on a bipartisan basis, but decisions about antitrust policy—and, potentially, antitrust enforcement—have proven contentious. That poses a potential obstacle for deals currently under investigation at the FTC, which tend to be large deals and those with market overlap between the parties.

How Long Could a Stalemate Last?

It took 99 days, from appointment to approval, for current FTC chair Lina Khan to clear the Senate in June 2021. It took her predecessor, Joseph Simons, almost twice that—190 days from his October 2017 appointment—to reach final Senate approval. Chopra was approved on the same schedule, with 190 days between appointment and Senate approval.

Congress is presently scheduled to adjourn for the year on Dec. 10. That means the Senate has about 30 working days on the calendar this year to finalize Bedoya’s approval. If they don’t complete the task before leaving in December, the FTC will likely operate with a 2-2 split for at least the next three months; the Senate typically spends most of January out of session. Of course, if Bedoya desn’t receive approval, we will be facing a more protracted period of insecurity.

Hang-ups for Specific Deals?

Operating short one commissioner won’t keep the FTC from reviewing and challenging mergers. Even if the commission can’t reach a majority to take action on a particular deal before it closes, the commission can always challenge the merger post-closing when five commissioners are available.

But having the Commission potentially deadlocked does make it harder to conduct routine business—like accepting settlement terms. And that may pose a problem for parties who want to close deals that are currently under investigation. The largest deals in particular could be left hanging a bit longer.

Bloomberg Law subscribers can find related content on our M&A Deal Analytics resource.

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