FTC sees rising number of merger probes

By Peter Kaplan

WASHINGTON (Reuters) - The U.S. Federal Trade Commission launched more in-depth merger investigations in 2006 as corporate merger activity increased, an agency official told Reuters on Thursday.

The FTC opened 28 full-scale probes into proposed deals during the fiscal year that ended September 31, FTC competition bureau chief Jeffrey Schmidt said at the Reuters Regulation Summit in Washington.

That figure was up from 25 in fiscal 2005 and 20 in fiscal 2004, according to FTC figures.

"That (upward) trend I think is continuing," Schmidt said.

The FTC shares responsibility for merger reviews and other antitrust enforcement with the Justice Department's antitrust division. Under U.S. law, companies must report large transactions to both government entities, which can ultimately challenge deals they believe would hobble competition.

The FTC and Justice Department conduct full-fledged investigations in only a fraction of cases in which an initial, 30-day examination of a deal raises serious antitrust concerns.

In those investigations, the government issues a "second request" for information that typically requires the companies to turn over large amounts of documents for the government to use in its review of how a deal would affect competition.

Schmidt said the increasing number of second-requests issued by the FTC mirrors a rise in applications by merger- minded companies during the last couple of years.

The number of merger applications increased to 1,860 in the 2006 fiscal year, up from 1,695 in 2005 and 1,454 in 2004.

Schmidt said the agency has followed through on plans to streamline the reviews by limiting the scope of second requests. Under targets set by the agency, most of those requests do not stretch back more than two years or seek documents from 35 more than employees, he said.

"I think that the feedback that I regularly get from the private bar is, as a practical matter, those reforms have really level-set the discussion between the parties and the (FTC) staff," Schmidt said.