O Omnibus Congressional Christmas Tree
A $1.7 trillion appropriations and policy rider package funds the federal government through the remainder of fiscal 2023 and boosts the morally bankrupt “woke” agenda. To call the bill a Christmas tree so close to Christmas is too easy, but apt.
One of the ornaments hanging on the Senate-negotiated FY 2023 omnibus appropriations bill, H.R. 2617, is a gift to antitrust extremists on both sides of the aisle whose broader legislative designs lost steam. The further they advanced, the closer the scrutiny. Those bills ultimately failed.
The expanded version of H.R. 3843's, the Merger Filing Fee Modernization Act, language constitutes Division GG of H.R. 2617. In addition to raising Hart-Scott-Rodino merger fees, the provision also extends access to state venues for federal antitrust lawsuits and requires disclosure of foreign subsidies of companies involved in mergers.
As the Alliance on Antitrust-led letter of this past fall noted, “the Biden administration's Federal Trade Commission and Department of Justice have weaponized merger reviews.” This isn’t the FTC’s first time straying from due process and the rule of law. The new legislative measure provides FTC Chairwoman Lina Khan significant new dollars to disrupt proposed business mergers or acquisitions and to reverse done deals.
Recently, for instance, the FTC has fought such M&A deals as Microsoft’s acquisition of video game developer Activision. This is a vertical merger, the sort that until now hasn’t been considered as having the anticompetitive potential as and being harmful to consumer welfare as horizontal mergers (i.e., gobbling up direct competitors) might be.
The FTC has also challenged DNA sequencer Illumina’s bid to reacquire its spinoff company Grail. Grail is developing a multicancer early detection test that requires DNA sequencing. The tie-up would advance the cancer test’s reaching commercial markets (and not unimportantly, saving lives, improving health and saving or reducing future medical care expenses).
These antitrust enforcement agencies have stepped up the number and scope of merger reviews. They’ve even moved to unwind completed transactions. Their aggressive posture instills greater uncertainty into M&A. Transaction costs rise. Economic and business efficiencies are diminished. And consumers’ interests suffer.
But, hey, what’s the problem with handing antitrust ideologues, already causing explosions in the antitrust space, more dynamite?
Also, H.R. 2617 allows state attorneys general the ability to haul parties into state courts for cases involving federal antitrust law. The state venue provision takes language from H.R. 3460, the State Antitrust Enforcement Venue Act.
As the AOA letter explains, this litigation expansion carries many risks. Instead of advancing unique state interests, it hands political actors opportunities to engage in politically motivated issues using antitrust hammers. “[W]here 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.”
State AGs notoriously engage plaintiffs' lawyers, who garner profits at consumers’ and taxpayers’ expense. Judge Richard Posner elucidated the problems with contingency-fee attorneys in state-sponsored litigation, well before this expanded access to state courts. That so many ostensible congressional tort reformers went along with this measure is sobering.
The part requiring disclosure of foreign subsidies in mergers has merit, but could have been enacted as a free-standing bill. It’s the Foreign Merger Subsidy Disclosure Act, H.R. 5639. This legislation aims to shine sunlight on foreign government financial backing of state-owned enterprises or other foreign national champions involved in M&A in the United States.
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It’s worth mentioning what’s not in the omnibus appropriations bill: the Pride in Patent Ownership Act. PPOA became a shattered Christmas ornament on the Senate floor.
All corners of the propatent, proinvention community, including CPR, mounted a full-court press. We warned lawmakers of the harm this bill would have on important aspects of our innovation ecosystem, how PPOA’s process lacks transparency and, as a result, that the bill remains heavily tilted in favor of patent infringers and against inventors and patent owners.
In short, PPOA would have deprived patent owners of the means they have of enforcing their property rights, and it would punish innocent future owners of patents for the recordation shortcomings of past owners. Dodging that bullet is something of a Christmas gift to America’s innovators and owners of intellectual property assets.