FTC Commissioners Question Use of Divestiture as an Effective Merger Remedy
Divestiture has long been considered an appropriate and effective remedy for anticompetitive horizontal mergers. The Federal Trade Commission (“FTC”), as reflected in the Statement of the Bureau of Competition entitled Negotiating Merger Remedies, and the Antitrust Division of the Department of Justice, as stated in its updated Merger Remedies Manual, agree that divestiture can effectively “preserve competition,” i.e., the ultimate goal of a merger remedy.
However, FTC Commissioners Rohit Chopra and Rebecca Slaughter (both Democrats) recently expressed their disapproval with the “status quo” approach applied to a merger in the pharmaceutical industry. Among other things, Commissioners Chopra and Slaughter expressed concern that in some cases, the divestitures failed at preserving the assets divested. In addition, Commissioners Chopra and Slaughter advocate for a remedy that not only addresses the competitive concerns raised by the transaction under investigation, but also shuts down the ability for market participants to engage in futuristic actions—like collusive conduct—that might have an adverse competitive effect. Commissioners Chopra and Slaughter also advocate for increased collaborations with other government agencies, and for seeking testimony from key executives on corporate strategies and design to assist with enforcement efforts.