Update on Appropriations for Antitrust Division and FTC, and AAI's letter to Conference Committee

Sep 09 1998
Testimony and Interventions

The following letter and background memo were on September 9, 1998, transmitted to :

Honorable Harold Rogers, Chairman
Honorable Alan Mollohan, Ranking Member
Subcommittee on Commerce, Justice, State, and Judiciary
Committee on Appropriations
United States House of Representatives
Honorable Judd Gregg, Chairman
Honorable Ernest F. Hollings, Ranking Member
Subcommittee on Commerce, Justice, State, and Judiciary
Committee on Appropriations
United States Senate



The American Antitrust Institute is an independent non-profit organization whose purpose is to foster education and research in support of a robust national antitrust policy. We are writing with respect to Fiscal Year 1999 appropriations for the Antitrust Division of the Department of Justice and the Federal Trade Commission, to urge you to support the maximum funding for our nation’s antitrust mission at both agencies.

We know you are aware of the enormous merger wave that has been dramatically restructuring our economy. Our antitrust agencies have fought heroically to review the greatly increased number of premerger filings of the past several years and to block the way where they find a lessening of competition. But the wave has been of tidal magnitude. Conversations with enforcement personnel and the antitrust bar make clear that only a part of the job is getting done. Too many filings means that many mergers receive only a cursory review and that some which ought to be challenged either pass through the door or are allowed to proceed on the basis of weak settlement conditions, because the resources are not available to conduct a full-scale legal effort.

In our opinion, even if the Congress appropriates at the highest levels before the Conference Committee, this will be too little. Given that over 98% of the requested money is available as a result of pre-merger filings (not to mention the criminal and civil penalties generated by antitrust), and no other competing priority will suffer if antitrust is fully funded, we urge you to avoid sending a message of indifference, which is how anything less than the highest figures before you may be perceived.

We also urge you to pay special attention to the structure of the FTC’s funding. As described in the attached memorandum, the House Report and the Senate Report are at odds with respect to the source of $11,000,000, intended by the Senate for monitoring of internet fraud. In order to avoid an apparently unintended shortfall for the FTC, it would be appropriate to structure the funding in accordance with the Senate’s Report.

The effective enforcement of the antitrust laws keeps prices competitive, assures consumer choice, protects opportunity for small and medium-sized firms to compete on the merits, and mitigates the over-concentration of political and economic power. No wonder there is a long history of bipartisan support for the antitrust laws. But good antitrust analysis is labor intensive, requiring expertise and judgment. Both the FTC and the Antitrust Division are under exceptionally capable management, backed up by dedicated and experienced staff. While none of us is likely to agree with each and every decision that will be made, it is essential that we increase their resources to assure that bad decisions are not made as a result of their continuing overextension.

Thank you for your consideration.




Albert A. Foer



Enclosure: Background Memorandum


Antitrust Appropriations for FY 1999

As of September 3, 1998

In the summer of 1998, both bodies of Congress passed appropriations bills that cover the two antitrust agencies for the next fiscal year. The Senate passed S. 2260, described in Senate Appropriations Committee Report 105-235, and the House passed HR 4276, described in House Appropriation Committee Report 105-636. While both bills provide increases for the Antitrust Division and the Federal Trade Commission, there are differences that will have to be ironed out in Conference Committee this September.



Antitrust Division: The appropriation in 1998 was $93,495,000. The budget request was for $98,275,000, and this was approved by the Committee and the Senate. Thus the Senate supports a $4,780,000 increase.

The Committee recommendations assume that $86,588,000 will be derived from offsetting Hart-Scott-Rodino fee collections in FY 1999 and $11,687,000 will be available from carryover balances. [See below for explanation.]

Federal Trade Commission: The appropriation in 1998 was $106,500,000. This covers both the Maintaining Competition Mission and the Consumer Protection Mission in approximately equal shares.

The Committee recommendations assume that $90,000,000 will be derived from offsetting fee collections in FY 1999 and $18,700,000 will be available from carryover balances. $3,167,000 would be directly appropriated from the Treasury. "The Committee," says the Report, "expects the FTC to use an additional $11,000,000 of fiscal year 1998 carryover funds to increase consumer fraud and Internet fraud monitoring activities as well as provide a modest increase for staff needed to handle the increased number of [H-S-R] filings at the agency."



Antitrust Division: The Committee recommended and the House passed $98,275,000, the full amount requested.


Of this, $68,275,000 will be derived from anticipated fee collections and $30,000 will be derived from unobligated fiscal year 1998 fee collections. The intent is to support an additional 15 positions to respond to workload increases in the Division’s Merger and Criminal Enforcement functions.

Federal Trade Commission: The Committee recommended and the House passed $110,490,000, which is $3,990,000 above the previous year but $1,377,000 below what was approved by the Senate.

Of this, $76,500,000 is to be derived from the current year offsetting fee collections, $30,000,000 is to be derived from prior year unobligated fee collections, and $3,990,000 is to come directly from the Treasury.


A Note on Hart-Scott-Rodino Fees

By law, fees collected by the agencies in conjunction with the receipt of premerger notifications filed under the Hart-Scott-Rodino Act are for the exclusive use of the two antitrust enforcement agencies. See Pub. L. No. 101-162, sec. 605, 103 Stat. 1031 (1989), as amended by Pub. L. No. 101-302, Title II, 104 Stat. 217 (1990) ("Fees collected for [Hart-Scott-Rodino filings] shall be divided evenly between and credited to the appropriations, Federal Trade Commission, ‘Salaries and Expenses’ and Department of Justice, ‘Salaries and Expenses, Antitrust Division’…Provided further, That fees made available to the Federal Trade Commission and the Antitrust Division herein shall remain available until expended.").

This statutory language makes clear that Congress enacted the H-S-R filing fee for the express purpose of funding these agencies. Thus, no program or priority other than antitrust enforcement has any expectation of receiving these funds, and—to the extent that filing fees are sufficient-- Congress need not take anything away from anyone else to fund antitrust. For fy 1999, Congress is assuming there will be $100,000,000 in filing fees, and that approximately $30,000,000 will be carried over from 1998. Carryover money is authorized after an agency files a reprogramming request, once the appropriations have been finalized.


Filing fees were initially proposed by Senator Howard Metzenbaum as a method of supplementing antitrust revenues, beginning in fiscal year 1990. The funds are split evenly between the Antitrust Division and the Federal Trade Commission, although the FTC uses some of the funding for consumer protection. In fiscal year 1999, H-S-R will fund all of the Antitrust Division’s budget and all but [ between $3,167,000 and $3,990,000], or more than 98% of the total antitrust and consumer protection budget.



Analysis of the Two Appropriation Bills

In terms of total appropriations, both the House and the Senate give the Antitrust Division its full request [that is, the official Presidential budget request, which is some $12,000,000 below the Division’s initial desired amount] of $98,275,000, which will be funded without resort to the General Funds of the Treasury. The FTC fared slightly less well, requesting $112,876,000 and receiving $111,867,000 from the Senate and $110,490,000 from the House. Assuming the final appropriation for the Antitrust Division will be $98,275,000, this will be an increase of 5.1% over the current year. Assuming the final appropriation of the FTC will be $111,867,000 (the Senate’s number), this will be an increase of 5.0%. (Assuming the House’s number, 110,490,000, the increase will be 3.6%.)

A problem arises with the FTC appropriation because of the different ways its funding is structured by the two bills. The Senate wants the FTC to conduct an expanded program for internet fraud, using $11,000,000 of the $18.7 million in carryover H-S-R money. The House does not mention internet fraud, and expects the FTC to use $30,000,000 (that is, all) of the carryover money.

To fund the internet fraud activity, the FTC will have to submit a reprogramming request, seeking an appropriation out of the carryover reserve from prior years. If the Senate’s structure is approved, using only $18,700,000 of the reserve, this will be no problem. But if the House structure is approved, using $30,000,000 in carryovers, there will be no reserve left to draw from. It would not be possible for the FTC to fund the Senate’s intent unless the House adopts the Senate’s funding structure. Thus, unless the Conference makes an appropriate adjustment between the two bills, the effect could be that $11,000,000 of intended funding is not actually available for use, and that the FTC would in effect suffer from a dramatic and unintended reduction in its budget. From the point of view of supporters of the antitrust laws, it would be preferable for the House to adopt the Senate’s higher appropriation for the FTC and the same fee structure as the Senate.




It is expected that staffers will begin meeting on September 11 and that action will occur in the week of September 21.