During Thursday’s House Appropriations Committee hearing, Rep. David Joyce (R-OH) questioned Federal Trade Commission Chairman Andrew Ferguson about mergers and acquisitions.
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00:00Thank you, Mr. Chairman. I now recognize myself for the initial question.
00:07Chairman, under the Biden administration, the FTC took an aggressive and unprecedented approach to enforcement and rulemaking.
00:13The commission stretches statutory authorities and at times took a hostile view towards mergers and acquisitions.
00:19Under your leadership, how will the FTC make a different approach going forward?
00:24Will you take a different one? And if yes, how?
00:26Mr. Chairman, I agree with you. I think that the FTC under the previous administration had a bit of an ideological bend to get mergers and acquisitions.
00:35And my view is that mergers and acquisitions are a very critical part of how the economy grows and how we get innovation.
00:43Founders, innovators need access to capital and people will not invest in new ideas if they can't get their investment back.
00:49And mergers and acquisitions is part of how capital flows to innovators and innovators get their new ideas to us in the marketplace.
00:58So M&A is very important. At the same time, protecting Americans from monopolies and from anti-competitive conduct is very important.
01:05And that's our job. So I see it as the FTC's mission is to serve as a cop on the beat in the M&A space.
01:12If we think that a deal is anti-competitive and we think we can win in court, we're going to go to court.
01:18And if we can't, we're going to get out of the way and we're going to get out of the way quickly.
01:22Congress set timelines by which we're supposed to examine M&A activity and we're going to stick by those timelines.
01:27That's on the front end. On the back end, the big change is that we are open to merger remedies at the FTC.
01:33My colleague, Gail Slater at the Department of Justice, has said the same thing.
01:37The previous administration prohibited remedies as a way to address anti-competitive conduct that didn't require blocking a whole merger.
01:44We are open to remedies negotiations with parties.
01:47The remedies have to be real. They have to be enforceable.
01:50And we have a strong preference for structural remedies over behavioral remedies.
01:54But in order to make sure that we are preventing as much anti-competitive conduct as we can, we have to recognize that sometimes we can eliminate anti-competitive features of mergers without blocking the whole thing.
02:06And we have to be open to doing that.
02:08So on the M&A front, those are the biggest differences between the previous administration and the current one.
02:13Are there any specific enforcement actions or rulemakings that you're looking to reverse?
02:17We tend not to discuss sort of the deliberations on that stuff.
02:21I wrote lots of dissents in the previous administration on both rulemakings and enforcement actions.
02:27And one of the things that we did when President Trump was sworn in is that we did not accept on faith the lawfulness, reasonableness, or the prudence of any ongoing enforcement matter or investigation and are conducting our own review top to bottom of everything that we inherited.
02:45If we think it's unlawful, if we think it's a poor use of agency resources, if we think it's inconsistent with administration priorities, then we will take steps to eliminate it, to change it, to align it with the law.
02:57If we don't, we will continue it.
02:59But particularly given that the FTC at the end of the Biden administration raced a huge amount of material out the door, we're conducting a thorough review.
03:07And as we find things that we think are either unlawful or inconsistent with administration priorities, we will be changing them.
03:14Complex antitrust cases, such as the proposed Kroger-Albertson's merger, have required FTC to spend millions of dollars on expert witnesses and data storage and analytics.
03:23How much does the FTC spend on expert witnesses and data analytics each year?
03:27And are these growing costs inhibiting the Commission's ability to bring and successfully try antitrust cases?
03:34It is not inhibiting our ability to do it, but it is a serious challenge that we're confronting.
03:38So we have a Bureau of Economics at the Commission with some of the country's most talented economists.
03:44They do unbelievable work, both at the investigative stage and at the litigation stage.
03:50We could not do our enforcement work without the Bureau of Economics.
03:52But a lot of our cases, not just big tech cases, a lot of our enforcement matters require us to onboard massive amounts of data in order to investigate potential wrongdoing and proceed to litigation where appropriate.
04:05And we don't currently have the infrastructure to house, maintain, and access those data in a meaningful way.
04:11So we end up paying vendors a lot of money to do that for us.
04:15We ran a pilot program at the end of the previous administration on ways to reduce those costs by bringing some of that infrastructure
04:22internally.
04:24It was very successful.
04:25We've been working with other parts of the government to expand that pilot and make it programmatic at the FTC.
04:30On the expert front, you're right, expert witnesses are expensive.
04:34Even with our very talented economists in the Bureau of Economics, we often have to hire industry specialist experts from outside the agency.
04:41We are imposing budgeting requirements within the agency for the first time, as far as I know, in the agency's history,
04:47to make sure that at the outset of litigation, everyone knows what the agency is willing to spend,
04:52and we constrain the agency to spend only those resources on litigation.
04:55That is going to help save us a lot of money by avoiding the ballooning problem at the end of litigation we've had in the past.
05:01Thank you, the chair now.