For Release
FTC, DOJ Submit Joint Comment to FERC Warning of Common Ownership Competition Risks in the Public Utilities Industry
Today, the Â鶹´«Ã½ Trade Commission and the Department of Justice jointly submitted a public comment to the Â鶹´«Ã½ 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.
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 Â鶹´«Ã½ Power Act (“FPAâ€). Under its current policy, FERC assumes that certain transactions are in the public interest and grants blanket authorizations approving the transactions.
As the FTC and DOJ’s joint comment letter explains, competition is a core component of FERC’s “public interest†standard in its Section 203 review.
The FTC and DOJ’s comment states that partial acquisitions, including common ownership where 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.
The agencies applaud FERC for undertaking this inquiry and encourage the FERC to consider the competitive consequences of common ownership in deciding whether to revise its current blanket authorization policy.
The Commission voted 5-0 to submit the joint comment to FERC.
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