Stopping mergers before they start

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If two companies above a certain size want to merge, antitrust regulators have to approve the deal first.  The FTC recently published draft guidelines for updating those procedures. This is a reasonable thing to do every once in a while to adjust the size threshold for inflation and make other updates. But as Alex Reinauer and I show over at National Review’s Capital Matters site, the new draft guidelines are so onerous that they seem designed to discourage mergers in the first place:

The additional regulatory burden alone would cost more than the FTC and Justice Department’s combined 2023 antitrust budgets, according to former law professor Gus Hurwitz. And as the FTC increases the amount of paperwork to be submitted, the time it takes for the agencies to review initial HSR filings will increase as well. All this extra attention to pre-merger filings would take away resources from other agency priorities, such as litigation and consumer protection. The costs to the private sector would be even larger.

The government estimates that the new rules would roughly quadruple the average paperwork hours per filing, from 37 hours to 144. Those 107 extra hours per filing mean about $350 million in added labor costs. Lawyers who charge many of those billable hours think that that is a lowball estimate and that the actual increase will likely be “multiple times that figure.”

All this extra paperwork is unnecessary. Regulators can tell at a glance that more than half of proposed mergers pose no anticompetitive threat. 

Read the whole thing here.

The comments we (meaning mostly Alex, with additional input from Jessica Melugin) filed with the FTC are here.