The Standard Merger and Acquisition Reviews Through Equal Rules Act, or SMARTER Act, has been considered by Congress for several years. The Act’s purpose is to streamline the antitrust agencies’ merger enforcement processes by eliminating differences between the two agencies based on the fact that the DOJ must challenge mergers under the Clayton Act and the FTC can challenge mergers under the Clayton Act and/or the FTC Act. Whether a transaction is reviewed by the FTC or DOJ is determined case-by-case depending on which agency has more expertise with the industry involved. As such, over time the antitrust agencies have each gained expertise over certain industries. The most significant difference between the two procedures is that the legal standard for a preliminary injunction against a deal is different in the different forums. While the FTC must show that an injunction is “in the public interest,” the DOJ is required to demonstrate “irreparable harm” will result in the absence of an injunction. Another important difference is the forum wherein the antitrust agencies seek to challenge a merger. The FTC, being an administrative agency, has the option of challenging the merger in the administrative court, while the DOJ does not.
The SMARTER Act would standardize merger review by requiring the FTC to challenge a transaction in federal court, rather than in its own administrative court, and imposing the same legal standard — a showing of irreparable harm — on both antitrust agencies. It’s unclear whether the new Congress will pursue a version of the SMARTER ACT, even with a Democratic House of Representatives. If a version of the bill does become law, parties would be guaranteed identical processes for challenging a transaction whether the deal was examined by the FTC or DOJ. This could prove meaningful and we will continue to monitor developments.