FTC to Require Acquisitive Firms to Obtain Prior Approval Before Closing Any Future Deal

The Federal Trade Commission has issued a new policy statement that seeks to restore into standard practice the use of prior approval authority to restrict future acquisitions for companies pursuing anticompetitive merger transactions.

Under the Prior Approval Policy Statement, companies seeking to make acquisitions should secure prior approval from FTC before closing any future deal in an affected market where violation is alleged to occur for a minimum period of 10 years, the commission said Monday.

FTC will look at the nature of the deal, degree of pre-merger market power, evidence of anticompetitive market dynamics, history of acquisitiveness of merging parties, the level of market concentration and other factors as it works to determine the coverage of a prior approval provision.

“The FTC should not have to waste valuable time and resources investigating clearly anticompetitive deals that should have died in the boardroom,” said Holly Vedova, director of FTC’s bureau of competition. “Restoring the long-standing prior approval policy forces acquisitive firms to think twice before going on a buying binge because the FTC can simply say no.”

In July, the commission voted to repeal a 1995 policy statement that ceased FTC’s practice of integrating prior approval and prior notice provisions in merger orders.

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