Justice Department and FTC Submit Joint Comment to FERC Explaining that Common Ownership by Investment Companies Can Raise Competition Concerns

The Justice Department's Antitrust Division and Federal Trade Commission (FTC) today jointly submitted a public comment to the Federal Energy Regulatory Commission (FERC) urging it to consider the competitive risks of common ownership when assessing acquisitions involving less than a controlling interest in competing firms.

As the Justice Department and FTC's joint comment explains, competition is a core component of FERC's "public interest" analysis in its Section 203 review. The joint comment states that partial acquisitions, including acquisitions involving common ownership in which individual investors hold non-controlling interests in firms that have a competitive relationship that could be affected by those joint holdings, can lessen competition in three ways. First, partial acquisitions can give the partial owner the ability to influence the competitive conduct of the target firm. Second, partial acquisitions can reduce incentives for firms to compete even absent direct control or influence. Third, partial acquisitions can facilitate an anticompetitive information exchange between competing firms by giving them or their common owners access to non-public, competitively sensitive information.

FERC is requesting public comments as it reviews its current policy on financial investment company ownership of electric utilities, specifically regarding FERC's blanket authorizations for investment company ownership of public utilities under Section 203 of the Federal Power Act. Under its current policy, FERC assumes that certain transactions are in the public interest and grants blanket authorizations approving the transactions.

The agencies applaud FERC for undertaking this inquiry and encourage FERC to consider the competitive consequences of common ownership in deciding whether to revise its current blanket authorization policy.