FTC Chairman Warns Companies of Tough Antitrust Enforcement

Timothy J. Muris, the U.S. Federal Trade Commission’s new Republican chairman, warned corporations to expect tough antitrust enforcement and cautioned business leaders against proposing takeovers that would have been challenged by his Democratic predecessors.

“Problematic mergers will face the same hurdles they did during the 1990s,” said Muris, who succeeded Robert Pitofsky in June to give Republicans a 3-2 FTC majority.

Legal experts and antitrust analysts have questioned whether Muris would be as aggressive in opposing corporate combinations.

Under Pitofsky, the FTC challenged Staples Inc.’s buyout of office-supply rival Office Depot Inc. and the combination of the four largest U.S. drug wholesalers--Cardinal Health Inc.’s proposed takeover of Bergen Brunswig Corp. and McKesson HBOC Inc.’s buyout of AmeriSource Health Corp.

The FTC is now reviewing a proposed $2.3-billion acquisition of No. 3 Bergen Brunswig by No. 4 AmeriSource. Muris didn’t comment on that or any other pending deal.

“If you come in with transactions that would not fly in the past, you are likely to crash unless you have compelling stubborn facts on your side,” Muris told antitrust lawyers at the American Bar Assn.’s annual summer convention.

Muris’ warning comes days after PepsiCo Inc. completed its $10.5-billion takeover of Quaker Oats Co., the maker of No. 1 sports drink Gatorade. The deal was permitted by a 2-2 FTC deadlock along party lines that rejected a staff proposal to challenge the transaction. Muris abstained because he had worked on the deal in private law practice.

Muris served notice he won’t live up to the expectations of some pundits.

“A few members of the merger bar have been telling the press that we are going to have more relaxed standards,” he said. “Those folks will be doing their actual or potential clients a big disservice if those clients act on that presumption.”

Corporate antitrust lawyers have criticized Pitofsky’s aggressive approach to antitrust enforcement, saying he challenged mergers despite a lack of evidence they would hurt competition. The office-supply and drug-wholesaler cases are often cited as examples of overreaching.

“I, too, intend to characterize my tenure by what I do, rather than what I do not do,” Muris said.

Muris said the FTC will continue investigating allegations that branded drug firms conspired with the makers of generic alternatives to keep these less expensive medications off the market.