A federal court’s recent grant of a preliminary injunction to the Federal Trade Commission, which effectively put an end to the merger between Sysco and US Foods, underscores the sensibility of the proposed Standard Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act, now working its way through Congress. While opposed by the FTC, SMARTER can simply and fairly require the FTC to show that a merger is likely to harm competition before it blocks the deal through the procedural device of a federal court preliminary injunction. That is the same standard the Antitrust Division of the Department of Justice (DOJ) must meet and is the standard approach for federal courts considering a preliminary injunction request. Unlike DOJ, the FTC faces a lower preliminary injunction standard.
In an article in the Washington Legal Foundation’s Legal Pulse, Squire Patton Boggs partners Mark Botti and Anthony Swisher explore the different standards, and point out the inequities in a system where the outcome of a merger review may turn on the luck of the draw as to which agency reviews it. Those industries that find themselves in front of the FTC face a far more daunting task than those who go before the DOJ due to the disparate standards.
Passage of SMARTER could lead to equal treatment for all mergers under the law when tested in federal court regardless of which agency happens to review them.