Academic journal article Vanderbilt Law Review

The Cautionary Tale of the Failed 2002 FTC/DOJ Merger Clearance Accord

Academic journal article Vanderbilt Law Review

The Cautionary Tale of the Failed 2002 FTC/DOJ Merger Clearance Accord

Article excerpt

I. INTRODUCTION

Antitrust law in the United States is the patchwork result of over two hundred years of evolving and often conflicting views of the government's proper role in regulating business. Depending upon the social and business climate of the era and the economic philosophies of Congress, the President, and the judiciary, federal antitrust jurisdiction has waxed and waned. The result is the current system wherein the Department of Justice Antitrust Division ("Antitrust Division") and the Federal Trade Commission ("FTC") share dual jurisdiction to enforce the federal antitrust laws.1 However, in the push and pull of the changing eras, the intersection of the two agencies' jurisdiction has become hazy and often troublesome. Nowhere is the uncertainty more evident than in the process by which the two agencies decide which will review and investigates a proposed merger.

In 2002, FTC Commissioner Timothy Muris and Assistant Attorney General Charles James announced the Merger Clearance Accord in an attempt to replace the old merger clearance process with a streamlined one in which each agency was given jurisdiction over mergers in particular industries.2 The agreement they reached was the result of cooperation between an independent agency and an executive branch agency in an admirable effort to improve the state of federal antitrust enforcement.

Senator Ernest F. Hollings, a Democrat from South Carolina, immediately, publicly, and dramatically raised the alarm, claiming that the allocation of review over media mergers to the Antitrust Division would result in a narrow-minded, unfair review by an executive branch agency completely beholden to the President.3 After a few months of theatrics and behind-the-scenes maneuvering, James and Muris publicly announced the abandonment of the agreement and returned to the status quo. The success of Hollings's solo efforts raises many important issues addressed in this Note.

The implications of the failed 2002 Merger Clearance Accord (the "Accord") are particularly worthy of examination in light of the political attention the federal antitrust agencies have attracted in recent years. Modern federal antitrust enforcement has a tremendous impact on the economy, and big business has a significant financial stake in how the antitrust laws are administered. The shortcomings of the pre-clearance process by which the two agencies allocate responsibility for reviewing mergers have not gone unnoticed by the legal, political, and business communities. Congress passed the Antitrust Modernization Commission Act of 2002 "to examine whether the need exists to modernize the antitrust laws and to identify and study related issues," by soliciting comments from all interested parties, evaluating proposals, and eventually reporting the findings to Congress and the President.4 The Antitrust Modernization Commission ("AMC") was charged with examining and suggesting improvements for the breadth of antitrust enforcement, including issues that arise out of dual merger enforcement.5 Any potential solution can be informed by the recently announced findings of the AMC.6

This Note will examine the failed 2002 Merger Clearance Accord in light of its implications for federal antitrust enforcement and any future attempts to improve the interaction between the FTC and the Antitrust Division and with Congress. The Accord had the potential to improve the quality of antitrust enforcement for both the corporations being investigated and the consumers being protected, but failed for narrow political reasons. A central tenet of administrative law scholarship is that political control of agencies is acceptable and helps to legitimize the otherwise shaky constitutional foundations of the "fourth branch."7 This game of political "chicken," however, in which an individual member of Congress used public threats of funding cuts to force the agencies to back down from a substantively good agreement, is not necessarily a practice to celebrate. …

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