Letter in Opposition to H.R. 3843, the "Merger Filing Fee Modernization Act"
We, the undersigned, write to you in opposition to the expanded version of H.R. 3843, the “Merger Filing Fee Modernization Act of 2022.” The Committee for Justice. Conservatives for Property Rights, and many of the Alliance on Antitrust coalition of about two dozen conservative group members oppose this legislation and urge House Republicans to vote against it.
H.R. 3843 combines increased merger filing fees legislation with a state attorneys general venue bill and a foreign subsidies of mergers disclosure bill. The reasons for our concern exceed the mere legislative language of any one of these measures. Foremost, it is much too close to Election Day to hand liberal Democrats a legislative victory with a patina of bipartisanship. Antitrust agencies deserve congressional oversight, not more discretion over weapons with which to pursue their radical agendas.
Requiring disclosure of foreign subsidies by adversarial governments of mergers is not objectionable, but not appropriate here as merely a "sweetener" to make the ill-advised antitrust provisions more palatable. This measure should instead be considered either as stand-alone legislation or in a competitiveness package in a Republican-majority Congress that includes pro-innovation measures, such as provisions of the Republican Study Committee's Countering Communist China Act.
We are concerned that the Biden administration's Federal Trade Commission and Department of Justice have weaponized merger reviews in an unprecedented manner. These agencies have dramatically increased the number and scope of merger reviews, even seeking to unwind completed transactions. This is hardly the time to give Chair Lina Khan more discretionary resources to deploy against American businesses. This will inject even greater uncertainty into the M&A environment, impose even higher transaction costs, and jeopardize economic and business efficiencies and consumer benefits that mergers routinely yield. And notably, in the Judiciary Committee markup, a majority of Republicans including the Ranking Member opposed this legislation.
Today, however, we will focus our attention on H.R.3460, the State Antitrust Enforcement Venue Act, which was incorporated into the modified H.R. 3843, the Merger Filing Fee Modernization Act. We fear this legislation could open the door for unintended consequences in antitrust litigation. We oppose this legislation as currently written.
H.R. 3460 carries broad potential consequences and would likely be detrimental to the rule of law, as well as to private businesses, taxpayers, consumers, and the judiciary. The proposed bill is not geared toward bringing to bear interests unique to a given state. Rather, this legislation empowers political actors—state attorneys general (AGs)—to engage in politically attractive issues that are directly or tangentially connected to antitrust.
On occasions where well-established antitrust issues are involved and a clear state interest exists, state involvement in antitrust litigation is more likely appropriate and beneficial. But where antitrust litigation involves political gamesmanship, headline-seeking, or exacting big-dollar payouts, increased and duplicative involvement by a larger number of state AGs adds little and can do broader damage.
Litigation reform advocates warn of the adverse impact this bill would have on current law. The multidistrict law was intended to make multidistrict litigation more efficient for the parties and the courts. The exception in subsection (g) of S. 1787 preserves the right of the federal government alone to choose its venue, but extends the privilege to 50 state attorneys general, even if they all bring substantially the same claims based on the same facts. Such a change risks heightened expense to all parties involved and could result in contrary rulings in different jurisdictions. Under this bill, companies could defend against private lawsuits only to then face lawsuits from as many as 50 states. Such a system could be weaponized.
The Pelican Institute’s recent report, “The Proper Role for States in Antitrust Lawsuits,” assesses the role of states in federal antitrust litigation. The report finds “mixed results” when states are involved in antitrust cases, “usually fail[ing] when they act more aggressively than the federal agencies.” The Pelican report concludes:
“States should exercise caution when considering antitrust cases that have strong implications outside of their borders. They should recognize the difficulty in proving complicated and fact-intensive cases. Instead of bringing novel, complex antitrust cases of national import on their own, states should focus their involvement in antitrust cases on instances where they have unique interests, such as local price-fixing, play a unique role, such as where they can develop evidence about how alleged anticompetitive behavior uniquely affects local markets; or where they can bring additional resources to bear on existing federal litigation. On the other hand, states can provide a useful check on overly aggressive federal enforcement by providing courts with a traditional perspective on antitrust law—a role that could become even more important as federal agencies aggressively seek to expand their powers. Through such strategic engagement, states would best serve the interests of their consumers, constituents, and taxpayers.”
Former Seventh Circuit Judge Richard Posner examined the involvement of state AGs in antitrust lawsuits, noting that states have fewer resources than federal antitrust agencies in antitrust litigation, with state AGs being “chronically underfunded.” Thus, state AGs rely on contingency-fee lawyers, and states’ briefs and arguments usually lack the quality of federal agencies’ filings. Posner also notes how politics may unduly influence state-led antitrust litigation because state AGs independently stand for election. These factors combine to diminish states’ legitimate interests in antitrust matters from being foremost. Rather, the state venue bill would exacerbate the problem of multiple political actors proffering competing theories in a case.
The Lawsuit Reform Alliance of New York warns that this legislation “would jeopardize the integrity of our legal system, invite a thicket of competing court rulings, and further empower politically motivated government actors and profit-driven private plaintiffs’ lawyers to target successful companies with questionable lawsuits.” Others have warned that the bill’s “framework could lead to large settlements over even unmeritorious claims.” And because some “states employ private, outside contingency fee counsel who are incentivized to maximize profits from litigation, rather than to protect consumers or competition,” plaintiffs’ attorneys would profit at the expense of consumers. These outcomes are hardly laudable goals of antitrust litigation.
Furthermore, state enforcement of federal antitrust law is not a priority of the American public. The National Taxpayers Union surveyed U.S. voters regarding state AGs’ priorities for investigations and litigation. It found the fewest voters—roughly 3-5%—wanted their AGs to sue drug companies and investigate companies for antitrust violations. A plurality said human trafficking was top priority. H.R. 3460, like many of the current antitrust proposals, might be good for playing political football inside the Washington, D.C. swamp, but does nothing to address the actual concerns of those in the states.
Finally, it is conceivable that deep-pocketed financiers of the Left and Democratic state AGs would see an opportunity to allege antitrust violations against firearms makers, oil and gas companies, and other politically disfavored industries. Politically motivated plaintiffs could find a means of weaponizing state-venue antitrust liberalization to cripple politically targeted industrial firms by working with state attorneys general.
In closing, the predominant antitrust legislative proposals in Congress today, including H.R. 3460 and S. 1787, are principally crafted by far-Left liberals who intend to undermine the Consumer Welfare Standard—an objective, evidence-based legal standard in antitrust jurisprudence that replaced the previous subjectivity and political nature of antitrust law. There is no reason not to wait until the next Congress, when Republicans are very likely to hold majorities in both the Senate and the House. If antitrust legislation is to be enacted, that which issues from a Republican Congress is far more likely to be reasonable, appropriately balanced, and properly attentive to the rule of law and the possibility of overreach by private plaintiffs and enforcement agencies.
Thank you for considering our views, and please vote “no” to the hastily-considered H.R. 3843. Save antitrust legislation for a Republican 118th Congress.
Sincerely,
Ashley Baker, Director of Public Policy, The Committee for Justice
Curt Levey, President, The Committee for Justice
James Edwards, Executive Director, Conservatives for Property Rights
Robert H. Bork, Jr.
