The Federal Trade Commission recently adopted several policy changes focused on how companies handle the merger and acquisition process, according to a report Friday (Oct. 29) in The Wall Street Journal.
The FTC is adopting a new policy that would give the body veto power over a company’s M&A activity “once it attempts an allegedly anticompetitive merger or acquisition,” the WSJ report says.
The new policy gives FTC members the right to squelch agreements involving companies that engage in anticompetitive behavior and could push for prior-approval rights when companies walk away from mergers after an antitrust investigation or if the FTC wins a merger challenge in court.
Holly Vedova, who leads FTC’s bureau of competition, said the new policy restores a practice used by the until the mid-1990s and “forces acquisitive firms to think twice before going on a buying binge, because the FTC can simply say no.”
The new FTC policy has emerged at a time of brisk M&A activity and could slow down the approval of some of those deals. Republicans says the new policy by the Democratic-led FTC will hamper the M&A market and could discourage companies from working with the FTC on settlements, pushing instead to resolve the matter in court, which could cost more money and take much more time.
Earlier this week, the FTC said it will be aggressively targeting more than 1,100 companies — including Uber, Lyft, Herbalife, Nu Skin, LulaRoe, Mary Kay, Amazon, DoorDash, Fiverr, Upwork and Instacart — if they make any misleading money-making claims.
The FTC can fine companies almost $44,000 per violation if they knowingly break the law about money-making opportunities. Companies that make false, misleading or deceptive statements about the earnings that can come out of money-making opportunities, including fake statements about how likely it is a participant will profit, are breaking federal law.